As Electric Vehicles (EVs) become more popular, demand for lithium, a key component in EV batteries, has skyrocketed.
China currently controls about 60% of global lithium processing through its vast network of refineries.
However, to reach Net Zero targets, EVs will need to make up about 60% of vehicles sold annually by 2030 and 100% by 2050, according to the International Energy Agency.
Australia, Chile, China, and Argentina collectively produce over 95% of the world’s lithium, but China dominates the lithium supply chain.
As a result, Europe and the US are both looking to boost their lithium independence, but it won’t be easy.
Despite being one of the world’s most lithium-rich countries, the US has only one working lithium mine, and projects in the West have faced lengthy permitting processes and opposition from conservation groups.
Similarly, plans to open lithium mines in Europe have been mired in regulatory issues and protests.
The Baroso mine in northeastern Portugal, for example, was expected to begin producing lithium for EV batteries in 2020 but has had to push the start date back multiple times as it awaits environmental approval.
China, on the other hand, is turning to areas in Africa and Latin America with less regulatory oversight to secure feedstock for its refineries.
In response, the European Commission is working on plans to lower regulatory barriers to mining and production of critical materials like lithium, cobalt, and graphite.
Meanwhile, the US has introduced the Inflation Reduction Act, which offers generous tax credits to EVs that source their battery raw materials domestically.
General Motors also announced in January that it would invest $650 million in a US lithium mine, a record investment by a car maker to secure the raw materials used in EV batteries.
As the West races to secure lithium supplies, the demand for the mineral is expected to far exceed supply under Net Zero goals.
While Europe and the US are making moves to boost their lithium independence, it will take time to loosen China’s grip on the lithium supply chain.
