未来能源研究所-电动汽车电池矿产“矿产安全”政策“Mineral Security”Policy for Electric Vehicle Battery Minerals 2025

“MineralSecurity”Policy

forElectricVehicleBatteryMinerals

SangitaGayatriKannanandMichaelToman

Report25-06March2025

AbouttheAuthors

SangitaGayatriKannanisaPhDstudentintheMineralandEnergyEconomics

programatColoradoSchoolofMines.ShealsoisaresearchassistantwiththeCriticalMaterialsInnovationHub,anEnergyInnovationHuboftheUSDepartmentofEnergy.

MichaelTomanisaseniorfellowwhoworkedatResourcesfortheFuturein1978–2003

andreturnedduring2021–2024;henowservesasaconsultant.Hiscurrentresearch

interestsincludecriticalmineralsfordecarbonization,carbondioxideremovals,

marketsforemissionreductioncredits,andclimatechangepoliciesindeveloping

countries

Acknowledgements

TheauthorsaregratefulforinformativeconversationswithAnupBandivadekar,DougBohi,EmilioCastillo,RoderickEggert,andseveralcritical-mineralindustryexpertswhoagreedtooff-the-recordinterviews;andforhelpfulcommentsonadraftofthepaperfromBeiaSpiller.TheauthorsalsoaregratefultotheHewlettFoundationforfinancially

supportingtheresearch.Responsibilityforthecontentofthepaperliesexclusively

withtheauthors.

ResourcesfortheFuturei

“MineralSecurity”PolicyforElectricVehicleBatteryMineralsii

AboutRFF

ResourcesfortheFuture(RFF)isanindependent,nonprofitresearchinstitutionin

Washington,DC.Itsmissionistoimproveenvironmental,energy,andnaturalresourcedecisionsthroughimpartialeconomicresearchandpolicyengagement.RFFis

committedtobeingthemostwidelytrustedsourceofresearchinsightsandpolicysolutionsleadingtoahealthyenvironmentandathrivingeconomy.

TheviewsexpressedherearethoseoftheindividualauthorsandmaydifferfromthoseofotherRFFexperts,itsofficers,oritsdirectors.

SharingOurWork

OurworkisavailableforsharingandadaptationunderanAttribution-

NonCommercial-NoDerivatives4.0International(CCBY-NC-ND4.0)license.Youcancopyandredistributeourmaterialinanymediumorformat;youmustgive

appropriatecredit,providealinktothelicense,andindicateifchangesweremade,andyoumaynotapplyadditionalrestrictions.Youmaydosoinanyreasonable

manner,butnotinanywaythatsuggeststhelicensorendorsesyouoryouruse.Youmaynotusethematerialforcommercialpurposes.Ifyouremix,transform,orbuilduponthematerial,youmaynotdistributethemodifiedmaterial.Formoreinformation,visit

/licenses/by-nc-nd/4.0/

.

ResourcesfortheFutureiii

Abstract

Thispaperdiscussesthenatureofquantityandpricerisksfromtheexerciseofmarketpowerovercriticalminerals,withanemphasisonthemineralsusedforelectricvehicle(EV)batteries.ThefocusisespeciallyonrisksinvolvingChinasincethatcountryholdslargesharesintheprocessingandextractionofseveralbatteryminerals.Quantity

riskisthethreatofselectiveinterruptionsinthesupplyofcriticalmineralsavailabletotargetcountries.Priceriskisthethreatofhigherpricesbyrestrictingsuppliestothemarketasawhole,therebyextractingeconomicrentsfrombuyers.Keyfindingsincludethat(i)Chinaisunlikelytobeabletocontrolmarketallocationsofbattery

mineralstoimplementselectivesupplycuts,(ii)Chinatendstooverbuildmineral

processingcapacitytosafeguarddomesticsupplychains,andthat(iii)Chinahas

engagedinexportpricediscriminationforcertaincriticalminerals,butcareisneededincomparingthisrisktotheriskinvolvedwithmassiveinvestmentinnon-Chinese

mineralprocessingcapacity.

JELnumbers:Q37,Q34,F52

Keywords:criticalminerals.electricvehiclebatteries.marketpower.industrialpolicy.

“MineralSecurity”PolicyforElectricVehicleBatteryMineralsiv

Contents

1.Introduction1

2.OverviewofCriticalMineralAvailabilityRisks2

3.CriticalMineralQuantity-AvailabilityRisksforBatteryMinerals2

4.EvidenceRelevanttoUnderstandChina’sInvestmentandPricingDecisionsin

LithiumandCobaltMarkets3

4.1.Lithium:DataonCapacity,CapacityUtilization,andPrices3

4.2.Cobalt:DataonCapacity,CapacityUtilization,andPrices7

5.WhatDotheLithiumandCobaltDataSuggest?10

6.WhatElseMightBeGoingOn?12

7.China’sLeadinBatteryMineralsProcessing13

8.PolicyImplications14

9.ConcludingRemarks16

References17

“MineralSecurity”PolicyforElectricVehicleBatteryMinerals1

1.Introduction

Whiletheconceptof“mineralsecurity”forUScriticalmineralsisinterpretedin

differentways,concernsabouttheiravailabilityarisefrequently.Thisfollowsfromthedefinitionof“criticalminerals”:non-fuelmineralsthatplayanimportantroleinthe

economyornationalsecurity,arechallengingtoreplaceatleastinthenearerterm,andaresubjecttosomenotablepossibilityofdecreasedavailability(NationalResearch

Council2008).

Twotypesofconcernaboutcriticalmineralsecurityarefoundinpolicydebates.Bothinvolveactorswithlargemarketsharesintheextractionand/orprocessingofsome

criticalminerals.Oneisthethreatofselectiveinterruptionsinthequantityofcriticalmineralsavailabletoparticulartargetcountriesduetogeopoliticalconflict.Theotheristhethreatofhigherpricesfromtheexerciseofmarketpoweroversuppliesby

restrictingoutputs,therebyextractingeconomicrentsfrombuyers1Thisexerciseof

marketpoweralsocaninvolve“predatorypricing”—floodingthemarkettodrivepricesdownwhenthereisathreatofcompetitiveentry.2RapidgrowthinChineseprocessingcapacitytoahugescale,eventothepointofapparentglobalover-capacity,has

becomeasubjectofconcern(DOT2024;EuropeanCommission2023).

Thispaperdiscussesthenatureofquantityandpricerisksfromtheexerciseofmarketpowerwithafocusoncriticalmineralsusedforelectricvehicle(EV)batteries.These

includecobalt,graphite,lithium,manganese,andnickel.Thefocusisespeciallyon

risksinvolvingChinasincethatcountryholdslargesharesintheprocessingand/or

extractionofseveralbatterymineralscomparedtotherestoftheworld(ROW)(see

Spiller,Kannan,andToman2023).Theargumentsinthepaperarebasedonamixtureoflogicalreasoning,informationaboutmineralsuppliesandmarkets,informationaboutChineseindustrialpolicy,andoff-the-recordconsultationwithseveralindustryexpertsinvolvedindifferentpartsofcriticalmineralsupplychains.

1“Economicrents”isatermusedbyeconomiststodescribeprofitsgainedbytheexerciseofmarketpower,beyondthenormalreturnsoncapitalandpaymentsforotherinputs.

2Someobserverswouldaddconcernsoverpricevolatility,thecommonplaceupwardanddownwardmovementsofpricesthataredifferentthanpredatorypricedrops.Critical

mineralpricevolatilityisseenasamplifyingfinancial/investmentrisksfornewinvest-

mentsincriticalmineralsextractionorprocessing.However,pricevolatilityisubiquitousincommoditymarkets—especiallymarketsforcriticalminerals,whichtendtobethinandopaqueandhaveinelasticnearer-termsuppliesanddemands.

ResourcesfortheFuture2

2.OverviewofCriticalMineralAvailabilityRisks

Thegeopoliticalconcerninvolvesthethreatofsupplyreductionsorinterruptionstargetedatspecificcountries.Suchrestrictionscertainlywouldhaveeconomicconsequences.Theseriousnessofthisthreatdependscriticallyonthedegreeoftargetingthatispossible,whichdependsinturnontheabilitytolimitresaleandtransshipment.

Theeconomicconcernisthatacountrywithalargeshareofmineralproductionand/orprocessingcoulduseitsmarketpowertoraiseprices,alongwithpricecutswhenneededtodetercompetingsuppliersfromexpanding.Onewaytoexercisemarket

poweristorestrictoutputsofprocessedminerals,raisingpricesforallpurchasers—domesticandforeign.Inthiscase,theeconomicrentsgainedfromraisingprices

toforeignpurchasersneedtobebalancedagainstadverseeffectsondomestic

purchasers.Theotherwaytoexercisemarketpoweristhroughpricediscrimination,restrictingexportssothatpricestoforeignpurchasersexceedpricestodomesticpurchasers.Wediscussbothtypesofmarketpowerbelow.

Competitionfromothersdependsonhowquicklycompetitorscanexpandtheir

outputifpricesareabovecosts.Althoughsupplyelasticities(thepercentageresponseofsupplytoaparticularpercentageincreaseinprice)tendtobelowintheshort

term,marketscanadjustoverlongerperiods.Inthemedium-to-longterm,anupperboundonthepricethatcanbechargedtoextracteconomicrentisasustainedpricesufficienttodrawcompetitorsintotheindustry.

3.CriticalMineralQuantity-AvailabilityRisksforBatteryMinerals

Scanthistoricalevidenceexistsforsuccessfulimpositionoftargetedsupply

restrictions.Observershavepointedtothefallof2010,whenChinastateditwas

reducingexportsofsomerareearthelements(REEs)overanunrelateddisputewith

Japan.Pricesforthoseelementsincreasedtenfoldanddidnotdeclineuntilpartway

through2011.However,dataonJapaneseimportsduringtheperiodindicatenosuddenanddramaticshortfallindeliveriestothatcountry(Johnston2013,24–26;EvenettandFritz2023,32–33).EvenettandFritz(2023)furthershowthatthereisnosolidevidenceofselectivesupplycutstoanybuyerofREEsfromChinaovertheperiod2010–2019.Inpractice,anyrestrictionsinChineseexportsaffectedtheglobalmarketasawhole,notindividualcountries.

“MineralSecurity”PolicyforElectricVehicleBatteryMinerals3

Forbatteryminerals,thestructureofthemarketsmakesitunlikelythatatargeted

restrictiononsuppliescouldbesustained.Thesemineralslargelyaretradedthroughasignificantnumberofbilateraltradeagreementsbetweenindividualsuppliers

andpurchasers.ItwouldbeverydifficultforChinatopreventresaleofmaterialstocountriesaffectedbytargetedrestrictions,whichwouldineffectbecomerestrictionsonavailabilitytothemarketasawhole.3

4.EvidenceRelevanttoUnderstandChina’sInvestmentandPricing

DecisionsinLithiumandCobaltMarkets

4.1.Lithium:DataonCapacity,CapacityUtilization,andPrices4

China’sdomesticproductionoflithiumattheextractionstagehasbeenintherangeof15–24percentoftheglobaltotalduringtheperiod2011–2023(RoskillInformationServices2020a,2020b;USGS2012–2024).Extractionoflithiumoccurslargelyfrom

twotypesofdeposits—so-calledsurfacebrineandhardrock.Extractionfrombrine

depositsinvolvesconcentrationofthebrineinsolarevaporationpondsandthen

furtherchemicalprocessingtoproducerefinedlithium.Hardrock–basedoperationsprimarilyinvolvelithium-bearingores,themostvaluableofwhichisspodumene.

Processingoflithiumfromhardrockbasedmineralsinvolvesvariousprocessesto

obtainlithiumconcentrate,whichisfurtherrefinedtolithiumchemicals(Warren2021).Chinadoesnothavesignificantcomparativeadvantages(technologicalorgeological)forextractedlithium.Nonetheless,Chinahascontinuedtobuilddomesticcapacityforbothbrineandhardrocklithiumextraction.

3TheDecember3,2024,editionoftheNewYorkTimesreportedthatChinawasstoppingsalestotheUnitedStatesofseveralnon-batterycriticalmineralsincludinggallium,ger-manium,andantimony.Exportsofgraphite(abatterymineral)wouldcontinuebutwithin-creasedscrutiny(DavidPierson,KeithBradsher,andAnaSwanson,“ChinaBansRareMin-eralExportstotheU.S.,”theNewYorkTimes,December3,2024,

https://www.nytimes.

com/2024/12/03/world/asia/china-minerals-semiconductors.html

).Subsequently,

ChinaorderedcustomersfromothercountriesnottoallowtransshipmentstotheUnitedStates(KeithBradsher,“China’sCriticalMineralsEmbargoIsEvenTougherThanExpect-ed,”theNewYorkTimes,December9,2024,

/2024/12/09/

business/china-critical-minerals.html

).TimewilltellhowmuchChinacaninpracticeeffectivelyembargocriticalmineralsuppliestoselectedcountries,giventheworkingsofthemarketsfortheaffectedminerals.

4ThedatainthissubsectionandthenextcomefromRoskillInformationServices(2019,

2020a,2020b),andfromvariousyearsofannuallithiumandcobaltstatisticsfromthe

USGSNationalMineralInformationCenter.BecausetheRoskilldataareproprietary,abso-lutequantitiesfromthissourcecannotberevealed.

ResourcesfortheFuture4

China’sshareoflithiumrefiningcapacityhasgrownfrom44percentin2013toalmost76percentin2020(Figure1).Chinesecapacityhasgrownatanaverageannualgrowthrate(AAGR)of33percentfrom2013to2020(Figure2).Duringthissameperiod,

thecapacityforrefininglithiuminROWhasgrownatanAAGRofapproximately10

percent,consistentwiththedeclineofitssharefrom56percentto24percent(Figure1).Thus,whileROWroughlydoubledcapacityforrefininglithium,China’scapacity

increased7.5times.Similartrendsholdforquantitiesofrefinedlithiumproductionaswell,withChina’sshareinglobalrefinedproductionatapproximately65percentin2020.

Figure1.RefinedLithiumCapacityShare

100

Total%CapacityShare

90

80

70

60

50

40

30

20

10

20132014201520162017201820192020

RestofWorldChina

Sources:RoskillInformationServices2020a,2020b;USGeologicalSurvey(USGS)—variousyears.

Figure2.RefinedLithiumCapacity

LithiumCarbonateEquivalent

8

IndexedMetricTonne

7

6

5

4

3

2

1

20132014201520162017201820192020

Chinacapacity

RestofWorld

capacity

Note:Figure2showsrelativegrowthincapacities,withChineseandRestofWorld(ROW)capacitiesnormalizedto1.0in2013.

Sources:RoskillInformationServices2020a,2020b;USGeologicalSurvey(USGS)—variousyears.

“MineralSecurity”PolicyforElectricVehicleBatteryMinerals5

Figures1and2donotseparatebrineandhardrockrefiningcapacities.ROWhas

higherbrinecapacitythanChina,althoughChina’shascontinuedtobuild.However,Chinaoverwhelminglydominatesglobalrefiningcapacityforhardrock–basedlithium.

Figure3comparescapacityutilizationforlithiumrefiningbetweenChinaandROW

over2013–2020.ItshowsthatChina’scapacityutilizationhaslargelyrangedbetween40and60percent,withadownwardtrendfromaround60percentin2013toaround

40percentin2020.ThecapacityutilizationfortheROWhasbeenhigher,hoveringaround80percentformostofthatperiod.

Figure3.CapacityUtilizationforRefinedLithium

100

%CapacityUtilization

90

80

70

60

50

40

30

20

10

ChinaRestofWorld

20132014201520162017201820192020

Sources:RoskillInformationServices2020a,2020b;USGeologicalSurvey(USGS)—variousyears.

Figure4comparesgloballithiumuse,Chineseuse,andChina’sandROW’srefined

lithiumcapacityover2013–2019.Thefiguresuggeststhatfrom2013to2015,total

(ChineseandROW)refiningcapacitygrewinlinewithgloballithiumuse.In2015,

however,thepaceofgrowthinChineserefiningcapacityincreased,leadingtoexcessglobalcapacity.After2017,China’srefiningcapacitysignificantlyexceededglobal

useofrefinedlithium(bygreaterthan150,000tonneslithiumcarbonateequivalent).Thisimpliesaggressivegrowthofprocessingcapacity,fasterthangrowthindemandforrefinedlithium.OnepuzzleiswhyChineserefiningcapacitygrewsomuchwhilecapacityutilizationratesdeclined(Figure3).Figure4alsoshowsapickupinthe

growthofdemandforrefinedlithiumafter2017.

ResourcesfortheFuture6

Figure4.NormalizedGlobalandChineseUseofRefinedLithium

IndexedMetricTonneLithium

CarbonateEquivalentTotal

7

6

5

4

3

2

1

2013201420152016201720182019

ChinacapacityChineseconsumption

RestofWorldcapacityGlobalconsumption

Note:Allfourdatalinesareshowninindexedform.Theindexingwascarriedoutasfollows:

(a)in2013,Chinesecapacitywasindexedto1.0andtheotherthreefigureswerenormalized

relativetothat;and(b)for2014–2020,eachofthefourdatalineswasconstructedbyusingtheratioofcurrenttoprevious-yearvalues.

Sources:RoskillInformationServices2020a,2020b;USGeologicalSurvey(USGS)—variousyears.

Figure5graphsglobalrefinedlithiumproduction(ChineseandROW)andthepriceoflithiumover2013–2020.Thelithiumpricewasstablefrom2013to2015butincreasedsubstantiallybetween2015and2018.Chineseprocessingcapacityandoutputbegantogrowmorerapidlyfrom2015to2017,whichpresumablymoderatedthesubsequentpriceincrease(Figures4–5).However,Chineseprocessingcapacitycontinuedtogrowfrom2017to2020,andactualoutputgrewoverthesameperiodeventhoughtherateofcapacityutilizationwasdeclining(Figure3).Theinevitableresultwasasignificantdeclineinthepriceofrefinedlithiumover2018–2020.5

5Lithiumpricesalsoshotupfrom2021to2022beforefallingbacksomewhatin2023.

SimilartothepatternshowninFigure5,Chineselithiumprocessingcapacitysteadilygrewoverthisentiretime.

“MineralSecurity”PolicyforElectricVehicleBatteryMinerals7

Figure5.RefinedLithiumProductionandPriceofLithium

9

8

Indexedproduction

7

6

5

4

3

2

1

20132014201520162017201820192020RestofWorldproduction

Chineseproduction

25,000

Annualaverageprice

(US$perMetricTonne)

20,000

15,000

10,000

5,000

Priceofbattery-gradelithiumcarbonate

Note:Metrictonnesoflithiumcarbonateequivalentproductionnumbersareindexed,usingthesameapproachoutlinedinFigure4.

Sources:RoskillInformationServices2020a,2020b;USGeologicalSurvey(USGS)—variousyears.

4.2.Cobalt:DataonCapacity,CapacityUtilization,andPrices

Chinaisaninsignificantproducerofcobaltattheminingstage,withanoutputshareofabout1–2percentthroughouttheperiod1999–2022(USGS2000–2023).Incontrast,Figures6and7showthatChina’scapacityforrefiningcobalthasgrownfromamere2.6percentsharein1999toalmost67percentin2021.TheAAGRforcobaltrefining

capacityinChinaforthisperiodhasbeenapproximately24percent,whereasthe

ROW’sAAGRforthesameperiodhasbeenamere1.8percent.ROW’scobaltrefiningcapacityshareintheworldfellfrom97percentto33percent.Similartrendsholdgoodforrefinedcobaltoutputaswell,withChina’sshareinglobalrefinedproductionat

around74percentin2021.

ResourcesfortheFuture8

Figure6.RefinedCobaltCapacityShare

100

90

80

%CapacityShare

70

60

50

40

30

20

10

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Year

ChinaRestofWorld

Sources:RoskillInformationServices2019;USGeologicalSurvey(USGS)—variousyears.

Figure7.RefinedCobaltCapacity

IndexedMetricTonneCobaltContent

12

10

8

6

4

2

2000

2002

2003

2004

2005

2009

2020

1999

2001

2006

2007

2008

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2021

Year

ChinaRestofWorld

Note:Figure7showsrelativegrowthincapacities,withChineseandRestofWorld(ROW)capacitiesnormalizedto1.0in2004.

Sources:RoskillInformationServices2019;USGeologicalSurvey(USGS)—variousyears.

“MineralSecurity”PolicyforElectricVehicleBatteryMinerals9

Figure8comparescobaltrefiningcapacityutilizationbetweenChinaandROWover1999–2021.Itshowsthatunlikethecaseforlithium,China’scobaltrefiningcapacityutilizationhaslargelyshownanupwardtrend,risingfrom20percentin1999tomeetROWat60percentin2012,andthenconsistentlysurpassingROWinthefollowingyears.Itgrewto100percentin2015beforefallingtoaround60percentin2019.

CapacityutilizationfortheROWhasbeenlargelyflat,intherangeof60percent.

Figure9showsthatChina’scobaltrefiningcapacityhasrisenatanincreasedratesince

2015andslightlysurpassedglobalcobaltusein2019.

Figure8.CapacityUtilizationforCobalt

120

%CapacityShare

100

80

60

40

20

ChinaRestofWorld

199920012003200520072009201120132015201720192021

Sources:RoskillInformationServices2019;USGeologicalSurvey(USGS)—variousyears.

Figure9.NormalizedChineseandGlobalUseofRefinedCobalt

IndexedMetricTonne

4

CobaltContent

3

2

1

2013201420152016201720182019

GlobalConsumptionChinesecapacityRestofWorldCapacity

Note:DataareindexedusingthesameapproachoutlinedinFigure4.

Sources:RoskillInformationServices2019;USGeologicalSurvey(USGS)—variousyears.

ResourcesfortheFuture10

InFigure10,thelineforthepriceofrefinedcobaltshowstwosignificantrunups,from

2002to2008(withsomeretrenchmentin2004–2005)andagainfrom2016to2018.

China’sproductionduringthefirstperiodstartedsmallbutgrewsubstantiallyuntil

2010,eventhoughthepricedroppedsignificantlyin2009.WecannotsaythatChina’scontinuedgrowthinoutputcausedthepricedropgivenotherfactors,suchasthe

globalfinancialcrisisandrecessionatthattime,butitpresumablycontributedtosomeextent.

Figure10.RefinedCobaltProductionandPrice

IndexedMetricTonneCobaltContent

20

18

16

14

12

10

8

6

4

2

100,000

90,000

US$perMetricTonne

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2011

Year

ChineseProductionRestofWorldProductionPriceofcobaltmetal(USspot)

Note:ProductionnumbersareindexedusingthesameapproachoutlinedinFigure4,exceptthenormalizationsarecenteredon2004ratherthan2013.

Sources:RoskillInformationServices2019;USGeologicalSurvey(USGS)—variousyears.

Chineseproductionresumeditsincreasein2012andsurpassedROWproduction,even

thoughthepriceofrefinedcobaltwasstagnantuntil2016.Subsequently,Chinese

outputgrewdramatically,evenafterthepricepeakin2018.Thecontinuedrisein

Chineseoutputpresumablycontributedtothepricedecline.Therateofcapacity

utilizationdeclinedafter2016(Figure8),meaningthattheverylargeoutputincreases

thereaftercanbeattributedtonewcapacitybeingbuilt(Figures6–7).

“MineralSecurity”PolicyforElectricVehicleBatteryMinerals11

Figure11.ChineseSteelProductionandIronOreImports

Note:ImpliedDomesticIronOreProduction(importequivalent):pigironconsumptionimpliedironunitdemandlessimports,plusstockchangesandtransformedtobeequivalentto

importedorecharacteristics(moistureandironcontent)

Source:RioTinto2016.

Figure12.ChineseAluminumProductionandBauxiteand

AluminaImports

Source:RioTinto2014.

ResourcesfortheFuture12

5.WhatDo