China Steals A March In Global Battle For EV Battery Market

IN THE BATTLE to control the critical industries of the future, score one for China.

Bolivia has chosen a Chinese-led consortium, CBC, to extract the lithium, a rare earth essential to the batteries that power electric vehicles (EVs), that lies in significant quantities under the South American country’s salt flats.

CATL, China’s leading EV battery maker, and the mining company CMOC (the old China Molybdenum) are prominent members of CBC. Bolivia’s state-owned Yacimientos de Litio Bolivianos (YLB) will front the project.

Bolivia’s laws require the state to exploit the country’s natural resources. Bolivia’s energy minister, Franklin Molina, made a point of saying the deal with CBC showed there were ‘sovereign alternatives to the privatisation models of lithium exploitation’.

Bolivia and neighbours Argentina and Chile sit atop the so-called ‘lithium triangle’, which contains more than half the world’s reserves. Hitherto, YLB has not been particularly successful in commercialising Bolivia’s deposits, which is why the government in 2021 called for foreign partners to participate. CBC outbid Lilac Solutions from the United States, the Uranium One Group from Russia and three other Chinese companies.

China already dominates the world’s lithium production through its processing capacity, which gives Chinese battery makers a cost advantage over foreign rivals.

CATL’s decision to squeeze efficiency gains from an older-generation lithium-ion phosphate battery technology rather than betting on newer alternatives has further enhanced its market position, generating the revenue to reinvest in other technological development that keeps it as a world leader.

German automakers have been courting it as a partner, as have several EU governments keen to create jobs in the sector and feeling irked that they have been cut out of the subsidies for EV production under last autumn’s US Inflation Reduction Act.

These subsidies are diverting investment from Europe, potentially including investment by Europe’s leading homegrown battery maker, Northvolt, which is reconsidering its plans to open a plant in Germany.

CATL, exploiting the opportunity, is considering opening a third battery factory in Europe.

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