Those efforts are taking shape, albeit slowly. If everything goes to plan, there will be 13 new gigafactories in the United States by 2025, joined by an additional 35 in Europe by 2035. (That’s a big if, with many projects beset by logistical problems, protests, and NIMBYism, most notably Tesla’s controversial gigafactory near Berlin.)
But those gigafactories are going to need lithium—and lots of it. In March, US president Joe Biden announced plans to use the Defense Production Act to fund domestic mining of lithium and other critical battery materials under the auspices of national security. Across the Atlantic, the European Union is advancing legislation to try and create a green battery supply chain within Europe, with a focus on recycling lithium.
But there’s an important piece missing between mine and manufacturing. Turning lithium ore into the purer lithium carbonate or lithium hydroxide needed for batteries is an expensive and complex operation. It takes years to get a lithium processing plant or gigafactory off the ground, and it could take decades and an estimated $175 billion for the US to catch up to China. China controls at least two-thirds of the world’s lithium processing capacity, and it’s this more than anything that could give it a stranglehold on the battery market for years to come.
Without urgent investment in this middle step, lithium pulled from new mines in the US and Europe might still need to be shipped to Asia and back again to be refined before it can be used in electric cars—increasing emissions, compromising energy independence, and handing China a trump card.
On the surface Kwinana appears to be a step in the right direction. A new lithium processing plant has been built to the north of the old refinery, and in May it successfully turned a lithium ore called spodumene into battery-ready lithium hydroxide for the first time. But even that doesn’t give Australia the ability to refine and freely sell its own lithium. The plant is a joint venture, and its majority shareholder is Tianqi Lithium, a Chinese mining and manufacturing company that controls almost half of the world’s lithium production.
In the global battery supply chain, China is everywhere. Tianqi Lithium also owns stakes in SQM, Chile’s biggest mining company, and Greenbushes, Australia’s biggest lithium mine. Both Tianqi Lithium and its domestic rival Ganfeng Lithium have signed deals across South America’s “lithium triangle,” a mineral-rich part of the Andes at the junction of Argentina, Bolivia, and Chile. It’s a similar story for other rare-earth materials needed for batteries: China controls 70 percent of the mining industry in the Democratic Republic of the Congo, home to almost all of the world’s cobalt, another critical component of lithium-ion batteries.
In addition to locking down global lithium supplies, China has also started to expand domestic production—it’s now the third biggest producer of lithium behind Australia and Chile, even though it holds less than 10 percent of the world’s supply.