- [Narrator] This little chunk of metal contains lithium.
So does this cell phone and this electric car.
The super light metal is a critical component
in batteries and the world's transition to green energy.
It's ignited a global lithium surge in demand
which is expected to reach
nearly 2.5 million metric tons by 2028.
- Lithium is the white gold of the electric age.
- [Narrator] China has become
the world's largest lithium processor,
controlling 55% of the market.
To fuel its lithium supply chain,
China needs to secure raw lithium abroad.
It's making risky major investments in lithium mines
in Africa and Latin America in hopes of controlling
one third of the world's raw lithium supply
as it competes with countries around the world
to feed a growing demand for lithium batteries.
Here's why experts say China is trying to protect
and expand its raw lithium sources
and how the US is struggling
to develop its own supply chain.
Before lithium ends up in all of these,
it first has to be processed in refineries like this one
which transforms lithium compounds into battery components.
China specializes as the world's largest lithium processor,
processing about 55% of the world's raw lithium.
After processing the mineral, it stays in China
or could travel to Japan or South Korea
to be turned into battery components.
Those batteries are then shipped around the world,
including the US.
The US processes very little lithium domestically,
and it's reliant on China's lithium processing.
China, on the other hand, made significant investments
in its domestic lithium refineries in the 2000s.
- China started doing it because you need a lot of energy
for refining and you also need the stomach
'cause it's a little bit of a sort of dirty thing to do.
China manufactured a lot of these appliances,
just got interested in it and got good in it.
And then of course there was also this push
by the Chinese government to electrify transportation
and scale up electric vehicles.
- [Narrator] China currently has the largest market
for electric cars, with around 60%
of global electric car sales.
And those cars need lithium batteries,
fueling China's demand for a reliable lithium supply chain.
- Lithium is just incredibly valuable
because it's an essential component in the technologies
that we need in order to achieve a lot of our climate goals
and to electrify the world.
Now in China's case,
it's just been a little bit ahead of the curve.
So for them, in order to maintain their lead
and in order to actually make the things that they do,
they need a supply of lithium.
- [Narrator] But China's supply chain has a weak link.
Even though it's the world's largest processor,
it relies on foreign countries for much of its raw lithium,
including US allies.
Chinese companies also mine some lithium domestically,
and they're fighting for control.
Global lithium prices were about 300% higher in August
than they were at the beginning of 2021.
- In China, as is the case all over the world,
people discovered that lithium
is becoming a very important commodity.
Demand for the commodity also shot up.
So when the local government auctioned rights
to explore a mine, the bidding war just started,
and they submitted thousands of bids and the prices went up.
- [Narrator] One recent auction for exploration rights
at a lithium site in Sichuan received over 11,000 bids.
And the auction for the Jiada Lithium Mine
closed at the equivalent of $580 million,
1300 times higher than its starting price.
Lithium is an abundant mineral globally,
but it's often difficult and expensive to extract.
- At the moment, China actually doesn't mine
a lot of lithium.
Most of the mining of lithium takes place
in Latin America and Australia,
which actually exposes Chinese companies
to a supply chain vulnerability of getting the raw material.
Chinese companies are really worried
that a lot of the countries that are friendly
with the United States might cut off
Chinese companies' abilities
to invest more in these countries.
- [Narrator] Australia, the world's largest
raw lithium supplier, blocked the sale of a mine
to a company with a director holding Chinese citizenship.
And Canada has similarly ordered three Chinese companies
to sell their stakes in Canadian mines.
Instead, China is turning to countries in Africa
and Latin America for riskier raw lithium investments.
In the past two years, Chinese companies have spent
$4.5 billion on stakes in nearly 20 African
and Latin American lithium mines.
- The strategy to go to developing countries
is not without risks because a lot of these countries
have somewhat unstable political regimes.
They're quite underdeveloped
when it comes to infrastructure.
And if you wanna mine and do things,
you need roads, you need power, you need facilities.
- [Narrator] Many nations are also tightening control
over their mines.
In December, Zimbabwe banned the export of raw lithium,
instead forcing companies to process it within the country.
- And then there's also something
called resource nationalism.
So a lot of these developing countries say to themselves,
well, you know, we have these resources
and selling it as a sort of raw product
actually gets us less money
than if we have a valued added industry with that.
So if we, for example, process lithium
and maybe even one day produce our own batteries
because that's actually where you make a lot of the money
and it's also in a bit an opportunity
to upscale your labor force.
But that's obviously easier said than done.
- [Narrator] And in Latin America,
Mexico and Chile are also tightening control.
While Chile, Bolivia, and Argentina are discussing
creating a lithium cartel.
- A lot of these developing countries
come with their own risks.
Chinese companies are also concerned
that US allied countries could limit
their access to lithium.
- [Narrator] Some experts disagree that China is vulnerable
to US allies restricting their raw lithium
and say that China's investments in Latin America
and Africa are paving the path
for a stronger supply chain in the future.
- For a lot of these countries that have lithium,
China is actually a very good customer
because it has a steady demand for lithium.
It doesn't just buy lithium for lithium's sake, right?
It buys it because it needs it for product.
So you know that they will be there tomorrow
and the day after tomorrow,
and that gives them a lot of stability
in terms of the money, the revenue that they can get.
You may not get the highest price,
but you get a very steady price,
and that can be very reassuring.
- [Narrator] Lithium mining died out in the US
in the 20th century because companies found cheaper methods
to harvest lithium in South American salt lakes.
- And because there was no mining,
refining also left the US.
- [Narrator] Now the US wants to secure its own supply chain
to reduce its reliance on China,
but it has a long way to go.
Propelled by the Inflation Reduction Act
and a growing demand for green energy sources,
the US is also increasing its efforts
to tap into its own lithium deposits
and construct domestic lithium refineries.
Tax credits and green energy subsidies
from the Inflation Reduction Act
discount the cost of producing lithium by 10%,
enticing companies to make American lithium investments.
Exxon Mobil plans on entering the lithium market
by building one of the world's largest
lithium processing facilities in Arkansas.
When completed, analysts predict it could produce
75,000 to a 100,000 metric tons of lithium a year.
That would add up to 15% of all finished
lithium product globally.
But there's a catch.
Many of these lithium extraction plants
haven't been built yet.
One upcoming mine owned by Lithium Americas
contains one of the largest known lithium sources in the US.
Lithium Americas told the Wall Street Journal
that besides one other small operational mine,
it has the only project in North America
that's permitted and in construction.
Its mine, Thacker Pass, has been in the works for 16 years
and still has another estimated three years
of construction to go.
- It's an essential metal for a lot of the technologies
that we need for the decarbonization of the world.
Every country wants to get hold of lithium
so that they can build those technologies.