China played a great game with lithium and we were slow to react: CEO

This March 2021 image shows a worker with car batteries at a factory in China.

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China is a leader when it comes to lithium — and the rest of the world hasn’t responded quickly enough to its dominance, according to the CEO of American lithium.

Speaking to CNBC’s Squawk Box Europe on Monday, Simon Clarke discussed how China has secured its position of strength within the industry.

“I just think the Chinese have — I mean, you have to take your hat off, they played a great game,” he said.

“For decades they have been locking up some of the best assets around the world and quietly going about their business and developing knowledge of building lithium-ion technology, soup to nuts,” he added. “And we reacted very slowly to that.”

The problem with lithium is that it's extremely difficult to mine, says American Lithium's CEO

He added that the US Inflation Reduction Act and a host of other measures meant people “started waking up to it”.

In addition to its use in cellphones, computers, tablets and a host of other devices synonymous with modern life, lithium — dubbed “white gold” by some — is critical to the batteries that power electric vehicles.

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China is certainly a dominant force within the sector.

In its World Energy Outlook 2022 report, the International Energy Agency said the country accounts for about 60% of the world’s lithium chemical supply. China also produces three quarters of all lithium-ion batteries, according to the IEA.

With demand for lithium increasing, major economies are trying to shore up their own supplies and reduce dependency on other parts of the world, including China.

It’s about a lot. In a translation of her State of the Union address delivered in September, European Commission President Ursula von der Leyen said that “lithium and rare earths will soon outnumber oil and gas”.

In addition to security of supply, von der Leyen also emphasized the importance of processing.

“Today, China controls the global processing industry,” she said. “Almost 90%… rare earth elements[s] and 60% of lithium is processed in China.”

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With this in mind, a number of companies in Europe are striving to develop projects focused on securing supply.

Minerals giant based in Paris ImerysFor example, plans to develop a lithium recovery project in central France, while what it says will be the UK’s first large-scale lithium refinery is to be built in northern England.

Looking ahead, American Lithium’s Clarke predicts continued geopolitical competition within the sector.

“There is a real initiative to take back part of the supply chain from … China,” he said.

“I think China is in such a dominant position that it will be very difficult to do that. But… I think you’re starting to see that approach.”

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