China has discovered its largest lithium deposit to date. Estimated to hold about 1 million tonnes of the critical mineral, the reserve is located in the Yajiang County of Sichuan Province.
Lithium is a silvery-white alkali metal. Sometimes nicknamed the “new oil” or “white gold”, it is essential in the world’s green transition, as it is a key element in the production of electric batteries: lithium-ion batteries, electric vehicle (EV) batteries and solar batteries.
According to the latest US Geological Survey figures, there are about 98 million tonnes of lithium in the world, the largest deposits being in Bolivia (21 million tonnes), Argentina (20 million tonnes), the US (12 million tonnes), Chile (11 million tons), Australia (7.9 million tons) and China (6.8 million tonnes). However, Thailand recently announced the discovery of a deposit that is estimated to hold 14.8 million tonnes, which, if confirmed, could make it the world’s third largest lithium holder. Despite the seemingly large quantity of lithium available (for comparison, there are only 244,000 tonnes of gold in the world and 550,000 tonnes of silver), only a fraction of it can be processed into batteries.
While China only has about 7% of the world’s lithium reserves, the country has positioned itself as a leading lithium refiner and battery manufacturer. Relying on imports from other countries, China currently refines about half of the world’s lithium and, according to the Chinese think tank EV100, produces about 70% of the world’s EV batteries.
“The supply of critical minerals is a growing concern and a strategic topic for many countries, China included”, said Yuan Sheng Yu, a managing director at Lux Research in Singapore. “The recent major discovery further cements China’s dominant position in the lithium supply chain and subsequently its global position in batteries and electric vehicles.”
Fuelled by its refining capacity, Chinese exports of batteries – lithium-ion, EV and solar – last year overpassed the 1 trillion yuan (€130.1 billion) benchmark for the first time. Moreover, amid a global movement away from traditional fuel and transition to electric vehicles, Chinese companies are increasingly competing with the likes of Tesla. According to the South China Morning Post, Shenzhen-based BYD has already produced more EVs than Musk’s company.
“Chinese export of EVs to Europe accounts for 8% of the EV market in Europe”, H.E. Fu Cong, Head of the Chinese Mission to the EU told Bloomberg. Addressing questions over subsidies for EV manufacturing in China possibly creating unfair competition for EU manufacturers, the Ambassador said “Chinese car makers, in this case, the EV companies are standing out because of the ingenuity of Chinese scientists and engineers and the hard work and efficiency of Chinese workers. It is not because of the government subsidies.”
Even with the discovery of the new reserve, which the Chinese Minister of Natural Resources has called a “major breakthrough”, the ministry has indicated it will continue to increase regional cooperation with Argentina, Bolivia and Chile for lithium imports, to ensure the consolidation of its position as the world’s leading lithium refiner and EV battery supplier.