China’s global reach into the critical minerals sector is deepening further, specifically with lithium, as the country quietly builds out its grip on the market to acquire more resources.
Chinese firms made up half of the major lithium deals that amounted to more than $100 million since 2018, according to an S&P study published Thursday. The value of the deals during that period is estimated to be more than $7.9 billion.
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“Heeding urgings from the industry, the Chinese government is likely to take more supportive actions, as it views these sectors as integral to the country’s core strategy,” the study reads. “This alignment of interest will facilitate the development of China’s influence over these minerals and the industries that rely on them as more Chinese firms secure access and expand production capacity.”
Lithium is a key material necessary in the transition to cleaner energy and has been determined as a material that is “essential to the economic or national security of the United States,” according to the Department of Energy.
Despite that label, Chinese firms have been more active in lithium mergers and acquisitions. According to the study, acquisitions of these assets by Chinese mining majors and lithium producers have gained pace since 2021, when lithium prices started to escalate. Miners, battery makers, and electric vehicle manufacturers are all jumping in to get skin in the game.
These gains could up the competition between Beijing and Washington over who can dominate the market for lithium, a material needed for electric vehicles, renewable power, and technology such as smartphones and computers. Furthermore, it could kick a dent into the Biden administration’s goals to electrify various sectors without relying on foreign adversaries to do so.
Lithium producers such as Ganfeng Lithium Co. Ltd. and Tianqi Lithium Corp. have been trying to secure upstream raw materials to expand production for their business. Metal miners such as Zijin Mining Group Co. Ltd. are also entering the lithium market to “diversify their exposure and to benefit from the mineral’s growth potential.”
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These gains fly in the face of more restrictive foreign investment policies that have blocked China from acquiring more lithium. In February, Australia’s government blocked Yuxiao Fund, a Chinese-linked investment fund, from increasing its stake in rare earth miner Northern Minerals Ltd. on the grounds of “national interest.” Chinese firms are facing similar challenges in Canada for both existing investments and future projects, with Canada introducing new rules to further regulate foreign investment in the country’s critical minerals sector.
In the face of more restrictive policies, Chinese firms are looking for critical minerals elsewhere, with many expanding their footprint in countries like Argentina, Mali, Mexico, and even within their own country. China also controls most of the lithium offtake agreements in Africa.
