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China’s lithium-triangle inroads show US challenges in EV race

17th October 2023

By: Bloomberg

  

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China’s latest investments in South America’s lithium triangle show the challenges for US efforts to counter the dominance of the world’s second-largest economy in key parts of battery metal supply chains.

On Monday, Chile unveiled a deal that gives Tsingshan Holding Group preferential lithium prices for a project to make value-added products in the South American nation. It was announced as part of President Gabriel Boric’s trip to China, where he met with Xiang Guangda, the metal group’s billionaire owner.

On the same day, Argentine President Alberto Fernandez was also in China, where he met with the head of Tibet Summit Resources to discuss the firm’s $2.2-billion in lithium investments in Salta province.

China is making further inroads into the so-called lithium triangle of Argentina, Chile and Bolivia, which accounts for more than half of global resources. In doing so, the Asian giant is helping those countries propel themselves further down the electric-vehicle supply chain by leveraging their vast mineral wealth.

The race to unearth more South American lithium is throwing open a new front in the global tug of war between China and the US. Washington is pushing EV makers globally to produce more vehicles in North America and secure the key minerals for them outside of the world’s second-biggest economy. But while Chile and Argentina are keen to participate, they continue to woo Chinese investors.

Tsingshan agreed to invest $233-million in a plant in Chile’s Antofagasta region to produce as much as 120 000 tons a year of lithium iron phosphate for rechargeable batteries. Yongqing Technology, Tsingshan’s new energy unit, will source feedstock for its plant from Chile’s biggest lithium producer, SQM, at preferential prices through 2030. Work will start in 2025.

Chile entered into a similar arrangement with Chinese EV juggernaut BYD in April. Additional lithium offtake — from Albemarle’s mine in Chile — will become available next year.

Meanwhile, China’s Zijin Mining Group is looking to develop a similar project in Argentina as it completes construction of a mine there.

Among other Chinese investments in Argentina, Ganfeng Lithium Group Co. is the majority owner of Minera Exar SA, which recently became the South American country’s first lithium project in years to enter production. Ganfeng also spent almost $1-billion last year to acquire another Argentine project.

Argentina authorities are drawing up a proposal to implement a similar incentive program to the one used in Chile, where producers set aside a portion of output for local value-added projects.

Tsingshan’s cathode plant in Chile will also source lithium carbonate from the firm’s venture with France’s Eramet SA in Salta, Argentina.

Earlier this month, BYD’s chairman and founder Wang Chuanfu met with President Boric in Chile, where they discussed accelerating electrification and developing the local lithium industry.

In Bolivia, a Chinese consortium led by Contemporary Amperex Technology Co. plans to spend $1.4 billion to build lithium extraction plants.

Edited by Bloomberg

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