China's electric vehicles compete for the global monopoly of lithium resources

Pure electric vehicles are increasingly becoming one of the options for many people to travel, and the emergence of new electric vehicle companies is overwhelming, which leads to one thing that must happen: the demand for raw materials for lithium-ion battery packs used in pure electric vehicles will rise. In addition, although China's lithium resources are also rich, the current amount of mining is not large enough, battery -grade lithium carbonate, high-purity lithium carbonate, etc. still need to be imported from abroad. In this context, many Chinese companies have faced the global control of the relevant raw materials, setting off a global battle for lithium resources.

A recent case was Tianqi Lithium, a Chinese lithium giant, which acquired about 24% of SQM held by Nutrien in May 2018 at a price of US$65 (approximately US$4.07 billion). SQM, collectively known as Sociedad QuimicayMineradeChile, is a Chilean chemical company that is the world's largest lithium producer and supplies fertilizers, iodine, lithium and various industrial chemicals. Before that, another lithium giant in the country, Ganfeng Lithium, had already opened up the layout of global lithium resources. It is reported that Ganfeng Lithium is the world third largest and China's largest producer of lithium compounds, and the world's largest producer of lithium metal. Ganfeng Lithium currently owns six high-quality lithium resources in Australia, Argentina, China and Ireland. Ganfeng Lithium owns a 43.1% stake in RIM Australia. In the first half of 2017, Ganfeng Lithium also acquired a 17.5% stake in Canada's Lithium Industry and a 4.84% stake in Pilbara, Australia, and also held 80% of the Mariana brine mine in Argentina. Equity and a 55% stake in the Irish Avalonia spodumene mine.

In fact, in the year of 2017 alone, Chinese-funded enterprises have deployed nearly 20 lithium mine resources projects overseas. The acquisition methods include acquisition of equity and signing of off-takement agreements. Including: Tibet Everest acquires Canadian company LithiumXEnergyCorp for 1.365 billion Yuan; Jiangte Electric acquired 11.45% stake in Australian listed mining company Tawana for 104 million Yuan; Huayou Cobalt acquired 11.2% of Australian AVZ company for 68.42 million Yuan; Mineral Resources acquired 11.14% of the shares of Australian PSC Company for 50.78 million Yuan; Baowei Holdings acquired the issued share capital of Australian mining company AMAL 15.56% for 99.31 million Yuan; Qingdao Ganyun Gaoke New Materials Co., Ltd. acquired Australia for 85.69 million Yuan Gossip Mining's 19.9% stake; Mengshi Technology acquired Canada's lithium mine exploration company Metalstech for 15 million Yuan; Great Wall Motor acquired 3.6 billion Yuan for Australia's Pilbara Minerals company's not more than 3.5% stake; Goshi invested 276 million Yuan to acquire bakano La Mining has a 19.89% stake.

Another case was in March 2018, when the Ningde Era (CATL) acquired a controlling stake in North American Lithium Inc. through its Canadian era. Ningde era is the leading battery in China in recent years. It is a star enterprise producing lithium-ion batteries. It maintains long-term strategic cooperation with domestic leading auto companies such as Yutong, SAIC, BAIC, Geely, Fuqi, Hunan Zhongche, Dongfeng and Changan. It has also entered the supply chain system of international first-class automakers such as BMW and Volkswagen, and has become the only power battery manufacturer in China that can go abroad and compete directly with international battery giants such as Panasonic, Samsung and LG.

Even with so many layouts, China's electric vehicle industry still needs to be strengthened in the safety of lithium resources. Regardless of the reserves or production of lithium, it is necessary to make greater efforts to meet the rapid development of the pure electric vehicle industry.

According to the US Geological Survey (USGS), the global lithium reserves in 2016 were about 14 million tons. Among them, Chile has a reserve of 7.5 million tons, accounting for 51.8% of the world's total reserves. In addition, China (3.2 million tons, 22.1%), Argentina (2 million tons, 13.8%), Australia (1.6 million tons, 11.1%) and other countries are also rich in reserves. The global supply of lithium resources presents the distribution of “four lakes and three mines”:

World-class lithium resources are concentrated in South America and Australia. Large salt lakes include Uyuni, Bolivia, Atacama, Chile, Salt Lake Olaroz, Hombre Muerto, etc. The main spodumene mines include the Greenbush mine in Australia's Talison and the MtMarion lithium mine in Australia's RIM.

The global supply of lithium resources is highly concentrated in the “four lakes and three mines”. According to the research report of CITIC Securities, in 2016, the global lithium mine output is equivalent to 184,000 tons of lithium carbonate equivalent, of which Talison, SQM, American Albe (ALB), American FMC and Australian Orocobre accounted for 91% of the total output. The concentration is high and the resource monopoly pattern is obvious.

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