In the 2022 production of lithium, graphite, cobalt, nickel and manganese, the main raw materials for lithium batteries, China shows a prominent presence.
As a power source for mobile devices and pure electric vehicles (EVs), lithium-ion batteries are indispensable. While Japanese companies such as Panasonic Holdings (HD), which makes car batteries, and AsahiKasei, which makes insulators (insulation layers), are internationally competitive in products and components, Japan is a small resource country that relies on imports of raw materials. Which countries are making a presence of themselves upstream?
The survey by the United States Geological Survey (USGS) shows that China shows a prominent presence in the 2022 production of lithium, graphite, cobalt, nickel and manganese, the main raw materials for lithium batteries. China has come to dominate supply chains not only by producing at home, but also by acquiring interests in mines abroad. How to get rid of its influence has become an important issue for Japan, Europe, America and Australia.
From the perspective of lithium, China’s “dominance strategy” has surfaced. In 2022, global production reached 130,000 tons, an increase of about 20% over 2021. 80% of that goes to batteries.
The largest producer is Australia, which accounts for about 47% of the total. China, home to major battery companies such as CATL and BYD, ranked third with around 15 percent. However, China is actively investing in lithium resources in Chile, Argentina, and Brazil, and is building a strong supply chain. Lithium ore processing and refining enterprises are also mostly concentrated in China.
It is estimated that the world’s lithium reserves are 98 million tons, about 750 times the current production. The estimated reserves do not include lithium from seawater, and the technology for extracting lithium from seawater is also under intense development, so the risk of depletion is low. However, if China’s influence over the entire supply chain is strengthened, it could lead to Chinese companies controlling the price of batteries and even final products such as pure electric vehicles.
Increasingly wary, other countries are competing with China to secure huge South American resources. In Japan, Toyota Tsusho acquired a lithium mine interest in Argentina’s Cauchari-Olaroz Salt Lake in 2012 and is increasing production capacity. When it comes to refining, many Australian companies are choosing to operate in their own country.
The same situation is becoming clear in key raw materials other than lithium.
The largest weight in the car battery is the graphite in the negative electrode. Although there are two natural and man-made, but China accounts for 65% of the world’s natural graphite production, because China’s electricity is low, artificial graphite manufacturers are also concentrated. Yao Ying, a researcher at Kaimeilai Information in Beijing who is familiar with the Chinese battery industry, said China was unlikely to stop supply. However, from the perspective of risk reduction, there is a trend of developing mines in some parts of the world.
What about nickel, cobalt and manganese for the positive electrode? Looking at nickel, which is used particularly heavily in vehicle batteries, global production in 2022 was 3.3 million tonnes, half of which was produced in Indonesia. Cobalt is 190,000 tons, and the Democratic Republic of Congo accounts for about 70%, ranking first. Manganese is mined mainly in South Africa.
In these resource areas, China has also adopted a consistent strategy. In the field of nickel, CATL and Zhejiang Huayou Cobalt, a battery material company, are mining and refining in Indonesia. In the cobalt sector, Chinese companies have strengthened cooperation with the government of the Democratic Republic of the Congo and hold most of the rights and interests of mines. From the perspective of manganese, which is rich in resources and low in price, the possibility of supply worries is small, and there is no obvious trend.
However, in-car batteries may reduce the use of cobalt and nickel in the future. The number of battery companies using lithium iron phosphate (LFP) cathode, which does not contain cobalt or nickel, is increasing in China. Although the battery has a smaller capacity, it uses common materials such as iron and is widely used in lower-end models that are cost-conscious. The manganese added lithium iron manganese phosphate (LMFP) system is also expected to be used in mid-range pure electric vehicles.
In Japanese companies, the trend of de-cobaltization and de-nickelization is also obvious. Panasonic said it will make positive electrodes that do not use cobalt practical around 2025, and positive electrodes that significantly reduce nickel use practical around 2030. Panasonic is working on joint research with Yokohama National University on manganese anode. The “game changer” in the battery field will also be based on technological innovation.