Learning This Week: Geopolitics in Battery Materials used in EV
Every week a brief peek into something interesting.
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Last week, I delved briefly into the EV value chain. This week we take a peek into another fascinating area of the control over EV battery supply chain.
If you crack open the battery cell of an EV you'll realize that there is an anode there is a cathode separated by an electrolyte. This is encased in the body of the battery. If you further break down the cathode you will find that it's typically made up of 4 important components - Lithium, Cobalt, Manganese and Nickel.
Cathode alone makes up 51% of the total cost of the battery so it's by far the most expensive component in the battery. The anode is usually made from graphite and makes up 12% of the total cost, the electrolyte makes up 4% and the separator makes up 7% of the total battery cost.
Out of the four elements that make up the cathode Lithium and Cobalt are the most important elements of all but if you look at where these materials are found you will see the secret to the next geopolitical battle.
Lithium - The Curious Case of Australia and China
96% of the entire world's lithium comes from only four countries - Australia Chile China and Argentina.
Although Australia produces over half the world’s Lithium, surprisingly it sells nearly 90% of it to China.
Lithium cannot be sold directly and it has to be first processed and then be sold and then it needs to be recycled to be sold again and China dominates each one of these value chain segments.
China controls most of the Lithium mines
In 2013, China acquired a 51% stake in the world's biggest Hard Rock lithium mine in Western Australia. A Chinese company is the second largest shareholder in a Chilean mining company called SQM and China's Gaffing Lithium Co controls 51% of an Argentinian lithium project. They also have heavily invested in Bolivian lithium reserves so China controls the supply of lithium.
Australia has no refining capabilities while China controls 60% of the global lithium refining capabilities.
Another interesting part is more than 66% of the current recycling capacity in the world only lies in China.
China also controls the Cobalt supply
Cobalt is the second most important element for an EV. In 2023, the DRC (Democratic Republic of Congo) was the largest cobalt producer, contributing approximately 73.3% of global cobalt production. Indonesia emerged as the second-largest cobalt accounting for nearly 5% of global production.
China's influence in the global cobalt supply chain is significant, with ownership shares in foreign production, particularly in the DRC, impacting the global cobalt market. In total, Chinese firms own 15 of the DRC's 19 primary industrial copper-cobalt mining concessions.
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