energy insights

Chinese companies on worldwide hunt for lithium reserves

Record lithium prices driven by supply shortages has sparked a frenzy of acquisition activity among Chinese mining companies and battery manufacturers as the country continues to shore up its lithium battery supply chain needed for electric vehicles.

Chinese companies have acquired 6.4 million metric tons of the world’s lithium reserves in 2021, nearly matching the 6.8 million tons acquired by all companies in 2020, and they have not been afraid to pay top dollar for these deals, cumulatively valued at $1.6 billion. Increasing interest in electric vehicles and maximizing renewable energy sources is driving demand for lithium-ion batteries, which has caused lithium prices to climb 350 percent in 2021.

“This year, the run-up in pricing was a real indication there isn't enough supply to feed the end market demand that we're seeing from both electric vehicles ... and also energy systems storage,” said Benchmark Mineral Intelligence analyst George Miller.

While China leads the world in lithium-ion battery production, it must import most of its lithium. So, acquiring reserves in foreign countries will help prevent costly supply disruptions as lithium supplies continue to tighten, experts say. Prior to the country’s acquisition spree in 2021, Chinese companies held more than 12% of the world’s raw lithium supply, according to market analysts.

Market watchers say there have been lithium rushes in the past, but this one may be here for a while.

As we watch the ever-changing lithium landscape, from the fast-moving Chinese acquisitions to the environmental protests targeting some proposed American lithium production sites, it’s clear that U.S. companies must seek out domestic opportunities that are rich in concentration, but environmentally sustainable as well.