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CHARGED UP

China’s lithium companies are in an investment frenzy

A factory of CATL in Ningde, Fujian province.
Reuters/Jake Spring
Expanding production.
  • Mary Hui
By Mary Hui

Reporter

Published

Chinese lithium mining and battery companies are splurging big, both at home and abroad.

It’s all part of the country’s race to secure supplies of the battery metals and to expand production capacity of lithium-ion batteries, for which demand is forecast to rocket over the next decade.

One senior industry executive captured the sentiment of the red-hot sector in an interview (link in Chinese) this month with Shanghai Securities Times: “Grab the scale, grab [market] share, profit is not a matter of consideration at this stage.”

Expanding battery production capacity…

In the month preceding Nov. 10, Chinese lithium battery companies pledged a total of some 100 billion yuan ($15.6 billion) in investments to expand production capacity, according to figures from Shanghai Securities Times. Two industry giants made up the bulk of the investments: CATL is investing 15 billion yuan (link in Chinese) to build a new manufacturing base in Guizhou province, while EVE Energy is plowing nearly 31 billion yuan (link in Chinese)  into a production plant in Hubei province.  Both firms made their announcements on Nov. 5.

Other companies have announced major projects to produce high-performance copper foils (link in Chinese), which are used as current collectors in lithium-ion batteries, and electrolyte (link in Chinese), a solution or compound that transports lithium ions from the negative electrode to the positive electrode.

…and snapping up lithium supplies

Meanwhile, Chinese mining and battery companies have embarked on a global acquisition spree. According to S&P Global, Chinese firms “acquired 6.4 million [metric tons] of lithium in reserves and resources in 2021, as of Oct. 18, nearly matching the 6.8 Mt of lithium acquired by all companies in 2020.”

Recent acquisitions include Zijin Mining’s purchase of Canada-listed Neo Lithium, which owns a major lithium project in Argentina; CATL’s purchase of Canada’s Argentina-focused Millennial Lithium; and Ganfeng Lithium’s purchase of another company’s remaining stake in a lithium project in Argentina.

In discussing the recent flurry of acquisitions, the party mouthpiece People’s Daily last month re-posted an article by the state-run Information Times, describing the purchases as an acceleration of China‘s “layout” (link in Chinese) of the global lithium and lithium-ion battery industries. It’s a word that Chinese press and policymakers often use to refer to strategic moves to establish footholds throughout entire supply chains, which can then be parlayed into considerable dominance across an entire industry, from raw materials down to the finished product.

An industry analyst quoted by Shanghai Securities Times echoed a similar sentiment: “…If we do not expand production, it is equivalent to giving up the market, which is also equivalent to giving up the future performance.”

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