Supply chain diversification due to resource nationalization
Nationalization of Mexico, Chile, Argentina, etc.
Review including China’s rare earth export ban
Indonesia Expands Copper and Tin to Nickel
LG Ensol, SK On, Posco Holdings
Long-term contracts with US, Australian and Chilean companies
Industry “The state needs a strategic approach”
As countries with core minerals for electric vehicle batteries have been barred one after another due to nationalization of resources, domestic battery makers are making all-out efforts to secure materials and working hard to stabilize the supply chain. Businesses are emphasizing the need for a national strategic approach to resource-rich countries.
According to the industry on the 1st, battery resource-rich countries that have ‘white oil’, such as lithium and nickel, have recently declared a policy of nationalizing these resources one after another at the political and economic level. Lithium-rich countries in Latin America are also moving to organize a ‘lithium cartel’ like the Organization of Petroleum Exporting Countries (OPEC) of oil-producing countries.
In particular, after the implementation of the Inflation Reduction Act (IRA) in the United States, Mexico, which has attracted attention as an alternative to reducing its dependence on China for battery raw materials, has recently taken measures to nationalize lithium and joined the ranks of ‘resource nationalism’. The Mexican government also passed a law last month that the state monopolizes exploration and mining in Sonora, which is estimated to have 1.7 million tons of lithium reserves.
Chile, Bolivia, and Argentina, the “lithium triangle” that borders salt lakes where 53% of global production is buried, are also accelerating nationalization. Chile is expected to establish a state-run lithium company this month and join the effort. Previously, Argentina designated lithium as a strategic material through the La Rioja government in January and suspended mining rights held by companies. Bolivia had already nationalized lithium in 2008 when a leftist government came into power.
China, the world’s largest exporter of lithium, is also known to be considering a plan to include rare earth elements, such as lithium, in its ‘export ban and restricted technology items’. If China bans lithium exports right away, there are concerns that ‘great chaos’ will occur in the global battery market.
Domestic battery makers are focusing on stabilizing the supply chain, such as diversifying key mineral suppliers, while paying attention to resource nationalism. Last year, LG Energy Solutions signed a contract with an American company to supply lithium carbonate and an Australian company to supply natural graphite. SK On has signed long-term supply contracts with lithium producers in Australia and Chile. Posco Holdings is also planning to start lithium production in North America in 2025, and has secured a 30% stake in nickel mines in Australia.
However, the industry unanimously agrees that a national approach is needed as the issue of resource nationalization is beyond the level of individual companies’ response. An official from the battery industry said, “Resource-rich countries that have nationalized lithium and nickel have obvious technical limitations in lithium refining, let alone battery development.” We have to approach,” he said. Another official said, “Strengthening the recycling of existing waste batteries is one way,” but also said, “The government must exercise diplomatic skills so that existing contracts signed by domestic companies in these countries can be smoothly implemented.”
Senior Reporter Lee Ki-cheol