Energy

China, which already commands most of the world’s lithium refining, is undertaking “a risky strategy” in an effort to lay claim to more of the metal globally: buying stakes in mines located in developing nations, according to The Wall Street Journal (subscription).

What’s going on: “China is spending billions on stakes in nations that have histories of political instability, local resistance and resource nationalism. Projects often face protests, regulatory delays and even cancellations. If China succeeds, however, it could secure access to one-third of the world’s lithium-mine production capacity needed by 2025, according to industry estimates.”

• Canada and Australia, which hold among the world’s largest lithium reserves, recently put an end to new Chinese investments in critical minerals.

Why it’s important: Lithium is a critical component of batteries used in electric vehicles and smartphones—and demand for the mineral could outstrip supply significantly by the end of the decade.

A precarious investment: To ensure sufficient lithium stock to power its EV industry (particularly as tensions with the U.S. rise), China has acquired stakes in close to 20 mines throughout Latin America and Africa.

• Some of the countries in which the mines sit face the risk of terrorist attacks, while others have a history of revoking agreements made with foreign firms.

However … China has some advantages over Western nations when it comes to securing lithium from South American and African nations.

• “CATL, for example, is a battery behemoth, with the political backing of Beijing and a strong network of companies along the supply chain.
• Developing nations often want to partner with Chinese firms that also do processing, refining or battery making, because they believe such companies will better guarantee them steady streams of income. ​​​​​​​