The energy crisis and the Russian invasion of Ukraine have accelerated the green transition, pushing companies and countries around the world to produce more environmentally friendly technologies. As a result, there will be 26 million electric cars in 2022, an increase of 60% compared to 2021, according to the International Energy Agency. These vehicles, as well as other products, run on electric batteries which, in turn, require lithium to operate. This has generated a global struggle for this essential mineral, called “white diamond”, in which the United States is trying to surpass China, a country slightly ahead in this race.

China dominates the midstream processing of critical minerals such as lithium, which has raised concerns at the Davos Forum and the IEA, particularly in the refining sector. Generally speaking, it represents 65% of global chemical refining. Concerning lithium, controls 50% of global refining of this metal. But the Asian giant wants more: according to the Wall Street Journal last May, the amount invested by Chinese companies over the last two years amounted to 4.5 billion dollarsspread across projects located in eleven different countries.

Of all these investments, half ended up in localized countries in Latin America and Africa. This is because in South America, there are the Lithium Trianglea region composed of Argentina, Bolivia and Chile who concentrates 50 to 60% of global lithium reserves. For its part, Africa has 30% of the world’s reserves of this mineral.

It is therefore not surprising that Chinese society Ganfeng-Lithium currently has four projects in development in Argentina, whose investment will amount to $2.7 billion with the objective of producing 74,000 tonnes of lithium carbonate per year. For its part, another Chinese company, Tibet Summit Resources, will invest $1.7 billion in two lithium extraction projects, whose joint production is estimated between 50,000 and 100,000 tonnes of lithium per year.

A paradigmatic case is that of Mariana Lithium Projectt of Ganfeng Lithium, a project located in the Salar de Llullaillaco, located in the Andes mountain range, inside the Argentine province of Salta. For the construction of this project – whose estimated production amounts to 20,000 tonnes of lithium per year – the company allocated 70% of the initial investment to the construction of several evaporation ponds and a processing plant. These elements are necessary to extract the mineral accumulated under the layer of salt lakes. In the first place, water is pumped to the surface and kept in the open air to evaporate. Subsequently, in a processing plant, the impurities are removed to produce lithium carbonate.

This whole process has a very negative impact on the environment. This is the reason why developed countries have chosen not to promote the extraction of this mineral, while China has chosen the opposite policy. For this reason, its dominance in the supply chain of this critical mineral, essential for the construction of batteries used in electric vehicles or cell phones, has increased, leading many countries to currently depend on Beijing in this regard. One of them is Australia -a country which concentrates 24% of the world’s lithium reserves-, which realized its mistake last July and blocked the acquisition of Alita Resources, a company specializing in lithium extraction, by Austroid Corporationa company linked to the Xi Jinping regime.

For their part, the United States had already become aware of Chinese progress in this area, and approved, in August 2022, the Inflation Reduction Act“the largest climate investment program” in the country’s history, according to Washington, with a budget of 430 billion dollars promote the production of sustainable technologies in the country. To do this, the country of stars and stripes will attract companies in the sector by offering them advantages such as tax exemptions. In addition, companies wishing to establish themselves in North America to manufacture electric vehicles will have to accept a series of conditions.

In this sense, at least the 40% of critical minerals because the lithium used in batteries must come from “friendly countries“, And at least 50% of the components used for batteries must come from a country of North America (USA, Canada or Mexico), excluding provisions from China.

This is how Washington responds China’s domination of the supply chain critical minerals for battery manufacturing. A control that even reaches at the heart of Teslawhile he 17% of suppliers linked to the construction of electric cars are Chinese. This makes this Asian country the second supplier to Elon Musk’s company, behind the United States, whose companies represent 22% of this supply. Additionally, according to Fronteo data cited by Nikkei, 39% of 61 battery storage-related companies are Chinese and 40% of the 42 companies linked to the refining of non-ferrous metals -except aluminum- also belong to the Asian country.

Eventually, China and the United States are in a race for control of critical minerals in which the Asian country is slightly ahead, thanks, among other things, to a policy of subsidies intended for production companies. The White House reacted similarly, and although the EU expressed concerns about businesses relocating to the United States, Brussels eased restrictions on state aid of this type. It seems that fight for electric batteries This oscillates between state subsidies and tax benefits, among other factors.