Take lithium, a crucial component in those batteries. China has around 8% of the world’s lithium reserves but processes about 58% percent of the world’s lithium supply. The situation is similar for other key battery metals. Nickel that’s mined in Indonesia goes to China for processing, and the same goes for cobalt from the Democratic Republic of Congo.
Over the past two decades, China has thrown money, resources, and policy behind electric vehicles. Now China leads the world in EV registrations, many of the largest EV makers are Chinese companies, and the country is home to a huge chunk of the supply chain for the vehicles and their batteries.
As the world begins a shift toward technologies like EVs, it’s becoming clear just how dominant China’s position is in many of the materials crucial to building that tech.
Lithium prices have dropped by 80% over the past year, and while part of the reason is a slowdown in EV demand, another part is that China is oversupplying lithium, according to US officials. By flooding the market and causing prices to drop, China could make it tougher for other lithium processors to justify sticking around in the business.
The new graphite controls from China could wind up affecting battery markets, too. Graphite is crucial for lithium-ion batteries, which use the material in their anodes. It’s still not clear whether the new bans will affect battery materials or just higher-purity material that’s used in military applications, according to reporting from Carbon Brief.
To this point, China hasn’t specifically banned exports of key battery materials, and it’s not clear exactly how far the country would go. Global trade politics are delicate and complicated, and any move that China makes in battery supply chains could wind up coming back to hurt the country’s economy.
But we could be entering into a new era of material politics. Further restrictions on graphite, or moves that affect lithium, nickel, or copper, could have major ripple effects around the world for climate technology, because batteries are key not only for electric vehicles, but increasingly for our power grids.
While it’s clear that tensions are escalating, it’s still unclear what’s going to happen next. The vibes, at best, are uncertain, and this sort of uncertainty is exactly why so many folks in technology are so focused on how to diversify global supply chains. Otherwise, we may find out just how tangled those supply chains really are, and what happens when you yank on threads that run through the center of them.
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