ERIC REGULY
GLOBE AND MAIL
DECEMBER 18, 2021
The minerals China is buying are indispensable for manufacturing high-tech products such as electric motors, mobile phones, wind turbines, hard disk drives and LEDs.
DECEMBER 18, 2021
The minerals China is buying are indispensable for manufacturing high-tech products such as electric motors, mobile phones, wind turbines, hard disk drives and LEDs.
Toby Melville/Reuters
A week ago, shareholders of Canada’s Neo Lithium approved the sale of a TSX Venture exchange-listed company to China’s Xijin Mining for about $960 million. The announcement received little coverage and appears to have upset almost no one in the federal government. it should have.
While Neo Lithium is hardly a household name, and the company is relatively small, its purchase should have struck a chord not only in Ottawa but among electric-car makers in Washington and North America. That’s because lithium is an essential component of the batteries that power vehicles (EVs), a suddenly growing market, and the global supply of the light, silver-white metal is driving large amounts of Chinese companies.
China has been quietly buying out lithium producers and deposits around the world for years and cobalt, another important component of car batteries, and rare earths, a group of 17 special metals essential to manufacturing high-tech products. Such as electric motors, mobile phones, wind turbines, hard disk drives and LEDs.
China’s strategy is clear and hardly a secret: It wants to lock down the raw supply and processing capacity of the metals that will power the next industrial revolution, from EVs and other clean-energy innovations to pioneering consumer electronics.
Trudeau pressures Canada to become an important mineral powerhouse
Within a year the coal investor moved from Paria to Luvi. How did this happen when the planet got hot?
A Swift Path to Economic Ruin
By all accounts, it has a strong edge in these metals, leaving North American and European companies to catch up — if they can. Recently, Western governments have realized their mistakes by not insisting on careful scrutiny of foreign takeover attempts in the industry. The ideology of the free market meant that management and shareholders got their way with minimal government or regulatory intervention.
A recent report by the Center for Strategic and International Studies largely concluded that the game is lost for the West, as China has made up a share in the “green” metals needed to decarbonize the world’s energy supply and transportation systems. . “No longer a simple mineral producer or component assembler, China is emerging as a high-value producer, requiring an increasing amount of minerals and metals that are needed for clean energy technology manufacturing,” the report said. considered important.” “China has become a major stakeholder in the global supply chain for critical minerals and clean energy commodities.”
The report estimates that China is home to 90 percent of the world’s solar photovoltaic manufacturing industry. In lithium-ion battery cell manufacturing, China has a global share of 80 percent, and its lithium refining capacity is estimated at 60 percent. It controls about half the value chain for wind turbines, including their blades, generators and gearboxes.
While China is a mining powerhouse on the domestic front, its domestic reserves are insufficient to feed its manufacturers. That’s why he has gone abroad to find raw material.
It has invested heavily in the Democratic Republic of the Congo, which is home to about two-thirds of the world’s cobalt supply, and is responsible for more than 70 percent of the cobalt refining capacity. In 2016, during the Obama administration, China Molybdenum purchased one of the world’s largest cobalt operations in the DRC, Freeport-McMoran, from an American mining giant. Four years later, in the final days of the Trump presidency, China Molybdenum bought another huge cobalt reserve from Freeport.
The shopping time was perfect. Over the years, EVs have gone from niche to mainstream products, with virtually every major automaker resting their future on them. A survey of 1,100 global auto executives by KPMG found that by 2030 more than half of their auto sales will be EVs.
China’s plan on the critical metals front has been called an “apple seed strategy”: it plants a lot of seeds in small companies and large long-term potential projects around the world, even if it recognizes that some of them are nowhere to be found. Can go The purchase of Neo Lithium by Zijin Mining, which bills itself as “The Next Major Lithium Producer”, was part of that strategy. The Canadian company’s massive lithium project is located in northwestern Argentina, near the Chilean border.
China is also lagging behind American lithium companies. But the United States is starting to see a backlash against the Chinese companies it acquires, partly because President Joe Biden is making EVs central to his climate change agenda. In November, when he visited the General Motors factory, Mr. Biden said, “You know, until now, China has been the frontrunner, but that’s about to change.”
He must have been delighted when Lithium America, which does business in New York and Toronto, won an international bidding war for Canada’s Millennial Lithium. The war began in July, when China’s Gangfeng Lithium, one of the world’s top producers, bid for a stake in Millennial. Chinese battery giant CATL joined the bid a few months later. In the end, the American company beat its Chinese rivals for the prize.
But none saved Neo Lithium from a Chinese takeover, though it’s possible the deal could still be blocked by Ottawa. All proposed acquisitions of lithium companies and others producing the metals needed for the Green Revolution, regardless of their size, should be reviewed. Only now is the government of Prime Minister Justin Trudeau waking up to the threat of handing over the keys to the next industrial revolution and job creation machine to China.
Mr Trudeau wants to make Canada a global leader in EV battery production and has called for a review of investment legislation to protect critical mining sectors from hostile foreign takeovers. The move that came out this week is the right thing to do – but should have come many years ago. China’s lead may be unstoppable.
A week ago, shareholders of Canada’s Neo Lithium approved the sale of a TSX Venture exchange-listed company to China’s Xijin Mining for about $960 million. The announcement received little coverage and appears to have upset almost no one in the federal government. it should have.
While Neo Lithium is hardly a household name, and the company is relatively small, its purchase should have struck a chord not only in Ottawa but among electric-car makers in Washington and North America. That’s because lithium is an essential component of the batteries that power vehicles (EVs), a suddenly growing market, and the global supply of the light, silver-white metal is driving large amounts of Chinese companies.
China has been quietly buying out lithium producers and deposits around the world for years and cobalt, another important component of car batteries, and rare earths, a group of 17 special metals essential to manufacturing high-tech products. Such as electric motors, mobile phones, wind turbines, hard disk drives and LEDs.
China’s strategy is clear and hardly a secret: It wants to lock down the raw supply and processing capacity of the metals that will power the next industrial revolution, from EVs and other clean-energy innovations to pioneering consumer electronics.
Trudeau pressures Canada to become an important mineral powerhouse
Within a year the coal investor moved from Paria to Luvi. How did this happen when the planet got hot?
A Swift Path to Economic Ruin
By all accounts, it has a strong edge in these metals, leaving North American and European companies to catch up — if they can. Recently, Western governments have realized their mistakes by not insisting on careful scrutiny of foreign takeover attempts in the industry. The ideology of the free market meant that management and shareholders got their way with minimal government or regulatory intervention.
A recent report by the Center for Strategic and International Studies largely concluded that the game is lost for the West, as China has made up a share in the “green” metals needed to decarbonize the world’s energy supply and transportation systems. . “No longer a simple mineral producer or component assembler, China is emerging as a high-value producer, requiring an increasing amount of minerals and metals that are needed for clean energy technology manufacturing,” the report said. considered important.” “China has become a major stakeholder in the global supply chain for critical minerals and clean energy commodities.”
The report estimates that China is home to 90 percent of the world’s solar photovoltaic manufacturing industry. In lithium-ion battery cell manufacturing, China has a global share of 80 percent, and its lithium refining capacity is estimated at 60 percent. It controls about half the value chain for wind turbines, including their blades, generators and gearboxes.
While China is a mining powerhouse on the domestic front, its domestic reserves are insufficient to feed its manufacturers. That’s why he has gone abroad to find raw material.
It has invested heavily in the Democratic Republic of the Congo, which is home to about two-thirds of the world’s cobalt supply, and is responsible for more than 70 percent of the cobalt refining capacity. In 2016, during the Obama administration, China Molybdenum purchased one of the world’s largest cobalt operations in the DRC, Freeport-McMoran, from an American mining giant. Four years later, in the final days of the Trump presidency, China Molybdenum bought another huge cobalt reserve from Freeport.
The shopping time was perfect. Over the years, EVs have gone from niche to mainstream products, with virtually every major automaker resting their future on them. A survey of 1,100 global auto executives by KPMG found that by 2030 more than half of their auto sales will be EVs.
China’s plan on the critical metals front has been called an “apple seed strategy”: it plants a lot of seeds in small companies and large long-term potential projects around the world, even if it recognizes that some of them are nowhere to be found. Can go The purchase of Neo Lithium by Zijin Mining, which bills itself as “The Next Major Lithium Producer”, was part of that strategy. The Canadian company’s massive lithium project is located in northwestern Argentina, near the Chilean border.
China is also lagging behind American lithium companies. But the United States is starting to see a backlash against the Chinese companies it acquires, partly because President Joe Biden is making EVs central to his climate change agenda. In November, when he visited the General Motors factory, Mr. Biden said, “You know, until now, China has been the frontrunner, but that’s about to change.”
He must have been delighted when Lithium America, which does business in New York and Toronto, won an international bidding war for Canada’s Millennial Lithium. The war began in July, when China’s Gangfeng Lithium, one of the world’s top producers, bid for a stake in Millennial. Chinese battery giant CATL joined the bid a few months later. In the end, the American company beat its Chinese rivals for the prize.
But none saved Neo Lithium from a Chinese takeover, though it’s possible the deal could still be blocked by Ottawa. All proposed acquisitions of lithium companies and others producing the metals needed for the Green Revolution, regardless of their size, should be reviewed. Only now is the government of Prime Minister Justin Trudeau waking up to the threat of handing over the keys to the next industrial revolution and job creation machine to China.
Mr Trudeau wants to make Canada a global leader in EV battery production and has called for a review of investment legislation to protect critical mining sectors from hostile foreign takeovers. The move that came out this week is the right thing to do – but should have come many years ago. China’s lead may be unstoppable.
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