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Europe’s Lithium Challenge on the Road to Electrification

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The following content is sponsored by Rock Tech Lithium.

The Road to Electrification

The world is moving towards a cleaner future, one where we will likely see electric vehicles (EVs) dominating our highways and city roads.

In turn, increasing EV adoption will inevitably increase the demand for battery metals, the critical ingredients of lithium-ion batteries. With governments tightening emission standards and some planning to ban gas-powered vehicles completely, securing the supply of these minerals is becoming increasingly important.

Europe—the largest market for EVs—is well on the way to electrification, but it faces one big speedbump: lithium supply. The above infographic from Rock Tech Lithium outlines the lithium supply chain and Europe’s lithium challenge on the road to large-scale EV adoption.

The Lithium Supply Chain

Before lithium makes it into EVs, miners extract it from the ground and downstream companies convert it from its raw form into lithium chemicals for batteries.

According to the USGS, there are 86 million tonnes of lithium resources worldwide, but the majority of production comes from a few regions.

Country2020E Production (tonnes)Resources (tonnes)
Australia40,0006,400,000
Chile18,0009,600,000
China14,0005,100,000
Argentina6,20019,300,000
Brazil1,900470,000

Australia, Chile, and China collectively accounted for 88% of lithium supply in 2020. Australia, the largest producer, produces the majority of its lithium from hard-rock spodumene mines. In the Western Hemisphere, Chile is known for lithium evaporation ponds in the Salar de Atacama, its largest salt flat.

Refining lithium into battery-grade chemicals is just as important as resources in the ground. China, the third-largest lithium producer, also dominates the production of downstream chemicals—lithium carbonates and hydroxides—with over 80% of global refining capacity.

Due to concentrated mine production and China’s dominance in the supply chain, the rest of the world is dependent on imports from a few nations. Import reliance and the resulting lack of supply chain security are a cause for concern, especially as lithium demand rises.

Europe’s Rising Need for Lithium

The European Union (EU) aims to have at least 30 million electric cars on its roads by 2030. In addition, European countries have rolled out various incentives for EV adoption—from subsidies for manufacturers to tax benefits for buyers. Consequently, Europe is becoming a hub for EV and battery manufacturers.

In fact, the EU is expected to account for 18% of global battery manufacturing capacity by 2029, up from 6% in 2019. And this doesn’t account for the six new plants that Volkswagen is planning to build by 2030.

With a growing demand for EVs comes a rising need for lithium. According to the European Commission, relative to current supply levels, the EU will need 18 times more lithium by 2030 and 60 times more by 2050.

Without any large-scale domestic production, the EU is heavily reliant on lithium imports. This puts its supply security and sustainability at risk for the long term.

Tackling Europe’s Lithium Supply Challenge

In a bid to develop a domestic lithium-ion battery supply chain, the EU has taken up initiatives to support every stage, from sourcing raw materials to producing finished battery packs.

  • The European Raw Materials Alliance (ERMA)
    The ERMA aims to develop a resilient supply chain for critical minerals by strengthening domestic raw material production.
  • Financial support
    The EU is offering EUR6.1 billion (roughly $7.5 billion) in subsidies to develop the battery production supply chain.
  • The European Battery Alliance
    A network of more than 600 participants from the battery value chain, aiming to build a strong and competitive European battery industry.

EVs are a key part of Europe’s push towards decarbonization, and mainstream EV adoption requires a sustainable supply of critical minerals like lithium.

Alongside these initiatives, developing new sources of both raw materials and refined products will play a key role in solving Europe’s lithium supply challenge.

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Energy Shift

China Dominates the Supply of U.S. Critical Minerals List

China was the world’s leading producer of 30 out of 50 entries on the U.S. critical minerals list, according to the U.S. Geological Survey.

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China Dominates the Supply of U.S. Critical Minerals List

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Most countries have, for many decades, kept a record of their own critical minerals list.

For example, the U.S., drew up a list of “war minerals” during World War I, containing important minerals which could not be found and produced in abundance domestically. They included: tin, nickel, platinum, nitrates and potash.

Since then, as the economy has grown and innovated, critical mineral lists have expanded considerably. The Energy Act of 2020 defines a critical mineral as:

“A non-fuel mineral or mineral material essential to the economic or national security of the U.S., whose supply chains are vulnerable to disruption.” — Energy Act, 2020.

Currently there are 50 entries on this list and the U.S. Geological Survey (USGS) estimates that China is the leading producer for 30 of them. From USGS data, we visualize China’s share of U.S. imports for 10 critical minerals.

What Key Critical Minerals Does the U.S. Import From China?

The U.S. is 100% import-reliant for its supply of yttrium, with China responsible for 94% of U.S. imports of the metal from 2018 to 2021.

A soft silvery metal, yttrium is used as an additive for alloys, making microwave filters for radars, and as a catalyst in ethylene polymerization—a key process in making certain kinds of plastic.

China is a major supplier of the following listed critical minerals to the U.S.

Critical MineralChina's Share
of U.S. Imports
U.S. Imports (Tonnes)Uses
Yttrium94%1,000Catalyst, Microwave filters
Rare Earths74%11,940Smartphones, Cameras
Bismuth65%2,800Metallurgy
Antimony63%25,590Batteries
Arsenic57%5,400Semiconductors
Germanium54%29,000Chips, Fiber optics
Gallium53%12,000Chips, Fiber optics
Barite38%2,300Hydrocarbon production
Graphite (natural)33%82,000Batteries, Lubricants
Tungsten29%14,000Metallurgy

Note: China’s share of U.S. critical minerals imports is based on average imports from 2018 to 2021.

Meanwhile, the U.S. also imports nearly three-quarters of its rare earth compounds and metals demand from China. Rare earth elements—so called since they are not found in easily-mined, concentrated clusters—are a collection of 15 elements on the periodic table, known as the lanthanide series.

ℹ️ Yttrium and scandium exhibit similar rare-earth properties, and are found in the same ore bodies. They are often grouped together with the lanthanide series.

Rare earths are used in smartphones, cameras, hard disks, and LEDs but also, crucially, in the clean energy and defense industries.

Does China’s Dominance of U.S. Critical Minerals Supply Matter?

The USGS estimates that China could potentially disrupt the global rare earth oxide supply by cutting off 40–50% production, impacting suppliers of advanced components used in U.S. defense systems.

A version of this sort of trade warfare is already playing out. Earlier this year, China implemented export controls on germanium and gallium. The U.S. relies on China for around 54% of its demand for both minerals, used for producing chips, solar panels, and fiber optics.

China’s controls were seen as a retaliation against the U.S. which has restricted the supply of chips, chip design software, and lithography machines to Chinese companies.

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Technology Metals

The Critical Minerals to China, EU, and U.S. National Security

Ten materials, including cobalt, lithium, graphite, and rare earths, are deemed critical by all three.

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The Critical Minerals to China, EU, and U.S. Security

Governments formulate lists of critical minerals according to their industrial requirements and strategic evaluations of supply risks.

Over the last decade, minerals like nickel, copper, and lithium have been on these lists and deemed essential for clean technologies like EV batteries and solar and wind power.

This graphic uses IRENA and the U.S. Department of Energy data to identify which minerals are essential to China, the United States, and the European Union.

What are Critical Minerals?

There is no universally accepted definition of critical minerals. Countries and regions maintain lists that mirror current technology requirements and supply and demand dynamics, among other factors.

These lists are also constantly changing. For example, the EU’s first critical minerals list in 2011 featured only 14 raw materials. In contrast, the 2023 version identified 34 raw materials as critical.

One thing countries share, however, is the concern that a lack of minerals could slow down the energy transition.

The Critical Minerals to China, EU, and U.S. Security

With most countries committed to reducing greenhouse gas emissions, the total mineral demand from clean energy technologies is expected to double by 2040.

U.S. and EU Seek to Reduce Import Reliance on Critical Minerals

Ten materials feature on critical material lists of both the U.S., the EU, and China, including cobalt, lithium, graphite, and rare earths.

Mineral / Considered Critical🇺🇸 U.S.🇪🇺 EU🇨🇳 China
Aluminum/ bauxiteYesYesYes
AntimonyYesYesYes
CobaltYesYesYes
Copper YesYesYes
FluorsparYesYesYes
GraphiteYesYesYes
LithiumYesYesYes
NickelYesYesYes
Rare earths YesYesYes
TungstenYesYesYes
ArsenicYesYesNo
BariteYesYesNo
BerylliumYesYesNo
BismuthYesYesNo
GermaniumYesYesNo
HafniumYesYesNo
MagnesiumYesYesNo
ManganeseYesYesNo
NiobiumYesYesNo
PlatinumYesYesNo
TantalumYesYesNo
TitaniumYesYesNo
VanadiumYesYesNo
TinYesNoYes
ZirconiumYesNoYes
Phosphorus NoYesYes
CesiumYesNoNo
ChromiumYesNoNo
IndiumYesNoNo
RubidiumYesNoNo
SamariumYesNoNo
TelluriumYesNoNo
ZincYesNoNo
BoronNoYesNo
Coking CoalNoYesNo
FeldsparNoYesNo
GalliumNoYesNo
HeliumNoYesNo
Phosphate Rock NoYesNo
ScandiumNoYesNo
SiliconNoYesNo
StrontiumNoYesNo
Gold NoNoYes
Iron ore NoNoYes
MolybdenumNoNoYes
Potash NoNoYes
UraniumNoNoYes

Despite having most of the same materials found in the U.S. or China’s list, the European list is the only one to include phosphate rock. The region has limited phosphate resources (only produced in Finland) and largely depends on imports of the material essential for manufacturing fertilizers.

Coking coal is also only on the EU list. The material is used in the manufacture of pig iron and steel. Production is currently dominated by China (58%), followed by Australia (17%), Russia (7%), and the U.S. (7%).

The U.S. has also sought to reduce its reliance on imports. Today, the country is 100% import-dependent on manganese and graphite and 76% on cobalt.

After decades of sourcing materials from other countries, the U.S. local production of raw materials has become extremely limited. For instance, there is only one operating nickel mine (primary) in the country, the Eagle Mine in Michigan. Likewise, the country only hosts one lithium source in Nevada, the Silver Peak Mine.

China’s Dominance

Despite being the world’s biggest carbon polluter, China is the largest producer of most of the world’s critical minerals for the green revolution.

China produces 60% of all rare earth elements used as components in high-technology devices, including smartphones and computers. The country also has a 13% share of the lithium production market. In addition, it refines around 35% of the world’s nickel, 58% of lithium, and 70% of cobalt.

Among some of the unique materials on China’s list is gold. Although gold is used on a smaller scale in technology, China has sought gold for economic and geopolitical factors, mainly to diversify its foreign exchange reserves, which rely heavily on the U.S. dollar.

Analysts estimate China has bought a record 400 tonnes of gold in recent years.

China has also slated uranium as a critical mineral. The Chinese government has stated it intends to become self-sufficient in nuclear power plant capacity and fuel production for those plants.

According to the World Nuclear Association, China aims to produce one-third of its uranium domestically.

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