By controlling the treasures of crude, how did China win the "battery arms race" in its favour?

By controlling the treasures of crude, how did China win the "battery arms race" in its favour?

China is not only seeking to remove America from the throne of the global economy, but is accelerating to control the clean energy technology sector, in which lithium-ion batteries are the cornerstone, and in which China has made long strides away from America and Western countries.

In a short period of time, China managed to win the "battery arms race" in its favour. (Others)

In light of the challenges posed by climate change on the whole world, and in conjunction with the pledges imposed by the major countries on themselves to implement the proposals of the “Paris Climate Agreement 2015” aimed at limiting the rise in global temperature to two degrees Celsius, I drew attention directly to the transportation sector, which consumes about 60 percent of global oil production annually, and with it began the transition to the world of electric cars, which is witnessing an increasing demand.

In the midst of the increasing demand for electric cars globally, companies and even countries are racing against time to reserve an advanced seat in a race that China is currently leading in the battery supply chain, starting from mining, through processing, to manufacturing batteries and the cars that will work with them.

Battery market

With the increasing reliance on electric cars as one of the most important ways to mitigate the increasing dangers of climate change, the market for batteries and their components is witnessing an unprecedented demand. Despite the emergence of electric cars a relatively short time ago, the number of electric cars on global roads until the end of last year amounted to about 10 million cars, an increase of 3 million cars over 2019, an annual increase of 43%.

And while China dominates the electric car market around the world with total sales of 1.3 million electric cars last year, or more than 40% of all electric car sales around the world, according to the British newspaper ( The Guardian ), the Chinese battery manufacturer CATL alone controls It accounts for about 30% of the world's electric car battery market.

Being interrelated, China's exports of minerals needed to manufacture lithium batteries such as nickel, cobalt and manganese oxide are increasing in line with the strong foreign demand for electric vehicles. If we take magnesium oxide as an example, we find that China exported nearly 27.5 thousand tons of this mineral during the first 5 months of this year, an increase of 105% over the previous year.

China's domination of ore treasures

During the past years, China succeeded in imposing its dominance on the mining sector in many countries of the African continent, which helped it also impose its dominance on the lithium-ion battery industry, which is completely dependent on minerals coming from Chinese mines in Africa, specifically from the Democratic Republic of the Congo.

And while last year saw Chinese refineries supply about 85% of the world's production of ready-to-use cobalt in batteries (the metal that enhances the stability of lithium-ion batteries), according to estimates of the cobalt supplier (Darton Commodities). Most of the cobalt ore comes out of the mines in the Democratic Republic of the Congo, where Chinese companies control about 70 percent of the mining sector.

Thanks to cobalt ore from Africa, the Chinese have come to dominate the cathode industry, the most important and main component of a lithium-ion battery, which consists of 4 main parts: the cathode, the anode, the electrolyte, and the separator. China alone controls 74.3% of global capacity, with forecasts reaching 83.8% by 2025, according to a report by Rystad Energy.

As electric car and battery producers began to prefer nickel cathode over cobalt cathode for fear of the notoriety associated with cobalt ore mining in Congo, Chinese companies that dominate cobalt mining in Congo, such as Huayou Cobalt and CMOC, have increased their investments in nickel mining and processing in Indonesia. Which has the largest nickel reserves in the world, the movement that made China the largest producer of nickel in global markets as well.

Europe is trying to catch up

Some European countries, led by Germany and France, are seeking to catch up with the battery industry, which is the backbone of electric cars, and in an attempt to sensitize the Chinese pace, European governments are pumping huge funds to build integrated capacities for processing raw materials into the battery industry.

To this end, it has taken the necessary measures to inject more than 100 billion euros into building a supplier chain for lithium-ion battery packs, in order to build factories to supply batteries needed for the giants of the car industry in the old European continent such as "BMW" and "Volkswagen", who have begun the transformation Towards electric cars, to stop relying on Asian imports, most of which come from the Chinese companies (CATL) and (BYD).

Despite all these attempts, Darton Commodities analysts believe that European investments are not keeping pace with their Chinese counterparts, which are miles ahead of them in mining, processing and manufacturing.

As the world races to dominate the technology of the future, America is slumbering as it invested $174 billion "to win the electric car market," according to President Joe Biden's $2 trillion infrastructure budget in April.

This prompted Simon Morse, CEO of Benchmark Mineral Intelligence, to tell a US Senate committee in June that "China builds a huge battery factory every week, while the United States builds one every four months." A new global economy for lithium-ion batteries is taking shape, but any ambitions to be a leader in the United States will only make slow progress, with China and Europe outperforming us.