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‘Battery arms race’: how China has monopolised the electric vehicle industry

November 26, 2021
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By Paul Homewood



Think of an electric car and the first name that comes to mind will probably be Tesla. The California company makes the world’s bestselling electric car and was recently valued at $1tn. But behind this US success story is a tale of China’s manufacturing might.

Tesla’s factory in Shanghai now produces more cars than its plant in California. Some of the batteries that drive them are Chinese-made and the minerals that power the batteries are largely refined and mined by Chinese companies.

As the world transitions to electric vehicles (EVs), companies are racing to secure and strengthen their positions in the battery supply chain, from mineral extraction and processing to battery and EV manufacturing.

The sector has seen a move towards vertical integration – where one company controls a number of steps along the supply chain – to guarantee supply and, in some cases, to improve transparency.

And in what has been dubbed, the “battery arms race”, China is in pole position.

China is the world’s biggest market for EVs with total sales of 1.3m vehicles last year, more than 40% of sales worldwide. Chinese battery-maker CATL controls about 30% of the world’s EV battery market. And cobalt specialist suppliers Darton Commodities estimate that Chinese refineries supplied 85% of the world’s battery-ready cobalt last year; a mineral that helps to improve the stability of lithium-ion batteries.

Most of that cobalt comes from the Democratic Republic of the Congo (DRC), where almost 70% of the mining sector is dominated by Chinese companies.

Drive through DRC’s southern copper and cobalt mining belt, and signs in Chinese are everywhere: at the entrance to casinos and hotels and on trucks and business premises.

The Chinese treat Congolese very badly. They like to insult us. Even for a small fault, you’re punished

In August, China Molybdenum Company (CMOC), a giant Chinese mining firm, announced an investment of $2.5bn (£1.8bn) to double copper and cobalt production at its Tenke Fungurume Mine, already one of the largest in DRC. That followed its purchase of a 95% stake in nearby Kisanfu copper and cobalt mine for $550m.

Fellow Chinese corporate giant, Huayou Cobalt owns or has a stake in at least three copper-cobalt mines in DRC and is a key player at every step of the cobalt supply chain, from mines to refineries to battery precursor and cathode production.

But China’s dominance of DRC’s copper-cobalt mines comes at a price, according to claims by Congolese workers employed at them.

“The Chinese treat Congolese very badly. They like to insult us. They like to raise their voices. Even for a small fault, you’re punished. The Chinese are there as the boss to control Congolese,” says a worker employed at Sicomines, a mine majority-owned by a Chinese consortium, which includes Huayou Cobalt.

Tesla’s Shanghai super factory now produces more cars than its California plant.

Tesla’s Shanghai super factory now produces more cars than its California plant. Photograph: Barcroft Media/Getty Images

Workers at Sicomines claim they are paid less than Chinese workers who do the same jobs, and are subjected to degrading treatment by Chinese supervisors.

“It’s the same as during the colonial times but now we’re under the Chinese,” says another worker.

Yet Amnesty International, which has conducted investigations into human rights abuses in the informal mining sector in the DRC, says the nationality of the companies dominating the EV market is not their primary concern.

“The issue is that many of the Chinese mining companies are refusing to be transparent about their operations, but the human rights issues related to cobalt mining in the DRC did not arrive with the Chinese: the DRC has a long history of foreign players coming to the country and exploiting their resources with little accountability,” says Mark Dummett, programme director at Amnesty International.

“Amnesty is extremely concerned about the impact that mining for electric car batteries is going to have on communities around the world; it has the potential to be devastating if the brands at the top don’t use their leverage to demand that these new global supply chains are set up in a way that respect human and environmental rights.”

Chinese mining companies point to the contributions they make to DRC’s revenues and local communities, while working in a challenging environment.

One Chinese manager says, “It’s very frustrating to work with the Congolese government. It’s the most corrupt country.”

Analyst Christian-Geraud Neema Byamungu, says labour laws are not always respected and corruption is widespread in the country as a whole, which potentially could create an environment in which companies are not inclined to follow the rules.

Some car and battery manufacturers are beginning to reduce the amount of cobalt in their batteries, partly as a way to avoid the legal and reputational risks associated with cobalt from DRC. Nickel-rich batteries are seen as one way forward, but the same Chinese companies that dominate cobalt mining in DRC – Huayou Cobalt and CMOC – are also increasing investment in nickel extraction and processing in Indonesia, which has the world’s largest nickel reserves at 72m tonnes. This means China is now the largest global market producer of nickel, beating off competition from Europe and the US.

“China will be the major player because they connected with the market in the country – but also export the nickel material at a lower price compared to Europe, as Chinese companies are known for cheap labour,” says Paul Ginting, executive director of Action for Ecology and People’s Emancipation (AEER), an Indonesian environmental NGO.

Recently there have been efforts to push back against China’s dominance, starting in DRC.

On a visit to Kolwezi in May, a city in the heart of DRC’s copper-cobalt belt, the country’s president, Félix Tshisekedi, said: “People come to Congo empty handed and when they leave they are billionaires, but we remain poor.”

DRC recently announced a review of some of its biggest mining contracts, including the $6.2bn deal which gave the Chinese consortium majority control over Sicomines in 2007.

The Chinese presence is everywhere in Kolwezi, from casinos to hotels, to road expansion projects and mines.

The Chinese presence is everywhere in Kolwezi, from casinos to hotels, to road expansion projects and mines. Photograph: Pete Pattisson


In Europe too, companies are beginning to gain on China’s lead. By the end of the decade, the continent is expected to have 28 factories producing lithium-ion cells, with production capacity due to increase by 1440% from 2020 levels, according to Darton Commodities. That growth is being driven by companies such as Britishvolt in Northumberland and Sweden’s Northvolt, as well as Asian firms expanding production into Europe.

However, European investment in mining and the production of battery precursor and cathode materials is not keeping pace, says Andries Gerbens at Darton. “China will eventually become less dominant. Nonetheless, it will remain a big player,” he says.

The US, however, lags behind, despite a $174bn investment “to win the EV market”, announced as part of President Joe Biden’s $2tn infrastructure package in April, although this has since been slimmed down.

Simon Moores, CEO of Benchmark Mineral Intelligence told a US Senate committee in June that China is building the equivalent of one battery megafactory a week compared with one every four months in the US.

He warned: “A new global lithium-ion economy is being created, yet any ambitions for the United States to be a leader … continue to only creep forward and be outstripped by China and Europe.”

  1. Dave Ward permalink
    November 26, 2021 10:14 am

    “As the world transitions to electric vehicles”

    “As the world is forced to transition to electric vehicles”

    There, fixed it for you.

  2. Ilma630 permalink
    November 26, 2021 10:22 am

    And what do the Chinese use to generate the electricity to recharge all these EVs?

    Cheap COAL! And lots of it.

    • Chaswarnertoo permalink
      November 26, 2021 1:31 pm

      Coal fired. Not electric.

      • November 26, 2021 6:11 pm

        31 % of the electricity produced is lost. 15 % uploading and transmitting.
        !6 % charging the Lithium Battery . . . Then you can turn the wheels . . .

  3. Hugh Sharman permalink
    November 26, 2021 10:25 am

    Excellent Paul. So the Grauniad very occasionally can be useful.

    The article did not mention the pretty horrific destruction of the Atacama Desert by lithium extraction companies. Nor that no matter how much more damage and loss of wild life and further social disruption that this will cause, lithium demand, increasing exponentially at 40% pa to meet “net zero” policies, cannot, in the foreseeable future be supplied, let alone economically.

    So our IC-driven vehicles cannot possibly be replaced with Boris’s dream of high accelerating EVs out-stripping Lamborginis in for new Tories in the “red wall” constituencies!

    • richardw permalink
      November 26, 2021 10:36 am

      EVs are only for use in Peppa Pig world.

  4. Tim Leeney permalink
    November 26, 2021 10:57 am

    Since the vehicles are useless, the more they spend on producing them in China the better.

  5. Ben Vorlich permalink
    November 26, 2021 11:02 am

    This is completely off topic but interesting, didn’t know where else to put it.

    How bright lights in cities cause spring to wake EARLY: Artificial lighting in urban areas alters plants’ day-night cycle, causing leaves to bud prematurely, study finds

    Researchers found LED streetlights kill off nocturnal moth caterpillar populations by 50 per cent, compared to areas without the lights.

    Urban heat islands occur when cities replace natural land cover with dense concentrations of pavement, buildings, and other surfaces that absorb and retain heat.

    • Gerry, England permalink
      November 26, 2021 3:17 pm

      I have heard before that LED street lighting can have some unforeseen effects due to its colour spectrum. Their is a lot of blue in the light that seems to be the cause of problems unlike the yellow sodium lamps. My local village has LEDs and they are able to be dimmed when there is no activity on the street and so save councils money on the ever escaliting electricity bill.

    • November 26, 2021 7:40 pm

      In the DT today an article about trees blooming 6 days earlier in cities than elsewhere as a result of the UHI effect.

      • Phoenix44 permalink
        November 27, 2021 8:58 am

        Like the Japanese cherry blossoms that “prove” the world is warming.

  6. It doesn't add up... permalink
    November 26, 2021 11:09 am

    You do have to wonder whether this is at all affordable.

    Cobalt prices have doubled since January to about $64,000/tonne, although they are only 2/3rds of the 2018 peak

    Copper prices are not far short of all time highs at just under $10,000/tonne

    Lithium carbonate prices have quintupled in a year to a new record of over $30,000/tonne

    Neodymium prices are now over $160,000/tonne, up from $60,000 just over a year ago

    In all of these China has a dominant global supply position, investing not only in processing but in mines.

    • Phoenix44 permalink
      November 27, 2021 9:12 am

      Perhaps but if I have to spend more of my money on China’s minerals I have less to spend on China’s other goods.

      China’s mercantalist strategy is quite stupid.

  7. mikewaite permalink
    November 26, 2021 11:16 am

    Its rather annoying to remember that the fundamental research work on litium cobalt materials was done in the US and, significantly for us , at the university of oxford when J Goodenough (winner of numerous prizes including Nobel prize) was leading the Inorganic materials chemistry work there.

    Sony were one of the first to exploit the potential of the materials I believe. In retrospect it was a pity that someone like Johnson Matthey or BAS did not see the potential of work which probably had at some point UK Govt funding.

    • November 26, 2021 12:34 pm

      Goodenough and Wittingham, both UK based chemistry Nobel laureates chose to move into US academia. Meanwhile with the post-brexit “talent” visa for Nobel laureates and other science prize winners there has not been a single application to move to the UK according to New Scientists. The scientific brain drain is continuous. Andre Geim calls it a sick joke.

      • Phoenix44 permalink
        November 27, 2021 9:02 am

        Well that’s an absolutely tiny pool and it’s been a very short time. Hardly evidence of anything other than some people’s determination to show how “bad” Brexit is by ignoring the 99% of predictions that Remainers got totally wrong and finding things like that.

  8. Douglas Dragonfly permalink
    November 26, 2021 12:15 pm

    Here in English cities the authorities appear to be pushing the wide spread use of lithium/cobalt scooters. Almost like a training vehicles.
    Yet even at this stage electricity production is the elephant in the room.
    Yes I posted this link not long back but it demonstrates how Western leaders continuously leave the door wide open for China to plunder the riches.

    The looming energy crisis heading at speed towards the UK is avoidable if we return to coal, oil and gas until alternatives have been proven to meet our needs.
    Anything else will be premeditated murder.
    Here’s an example of failure to listen :-

  9. sean2829 permalink
    November 26, 2021 1:17 pm

    The Chinese are very good at getting ahead in key markets. In 2000, many tool makes in the US found that finished molds made in China cost less than the raw materials in the US. So US molding companies imported tools from China. Not long after they found they could barely compete with China on molding parts and any assembly was much less expensive in China so many firms became importers of their own product and were nothing more than a brand.
    Look what China did in Solar panels. Remember when Germany was a big deal in solar technology? Government mandates significantly reduced the risk fir China who knew they could dominate markets. They’ve done similar things in semiconductors.
    China thinks much longer term than the west. They are very predictable, thorough and competent. They must marvel at the shortsightedness of the nations they intend to dominate.

    • Phoenix44 permalink
      November 27, 2021 9:09 am

      But this is simply wholly mistaken. There are infinite “key markets” to get ahead in. If I devote resources to one, I can’t dedicate resources to one of the others. China is thinking short-term, not long term by focusing on today’s markets. And by closing down all forms of dissent and discussion it is now ensuring that it cannot think long term properly.

  10. November 26, 2021 1:41 pm

    FIRST . . . Would someone . . . PLEASE expose the truth about Electric Cars . . .

    They burn up to 31 % More CO2 per kilometer driven than Gas cars . . .

    Where does Electricity come from? How is it produced?

    Even Wind Turbines have HUGE CO2 Inputs . . . ALL Electricity Poisons Planet Earth . . .

    There is NO panacea . . . !!

    • Ilma630 permalink
      November 26, 2021 3:22 pm

      And try pointing this out to your MP, to get their feet embedded in reality, and they’ll deny it and push the net-zero agenda, which is a pie-in-the-sky, non-existent Utopia.

  11. Broadlands permalink
    November 26, 2021 2:33 pm

    Hardly noticed in all of theses discussion of batteries, strategic minerals, and electric vehicles is the need for renewable biofuels to make it all possible. The US was on its way to becoming energy self-sufficient but is now having to use strategic oil stockpiles to keep biofuels cheap and available…adding even more CO2 to the atmosphere in the process. The countries that have the natural fossil fuel resources for transportation will be in the “cat-bird seat”…If this obsession with “climate change” would disappear. Even adaptation to extreme weather will need renewable biofuels (which are 90% fossil fuel).

  12. Gamecock permalink
    November 26, 2021 4:46 pm

    ‘As the world transitions to electric vehicles (EVs)’

    [citation needed]

    The wildest speculation you can find says no such thing. Market penetration may approach 50% some decades out, but that is NOT a transition to EVs.

    Secondly, all the wild predictions (or are they projections?) lump PHEVs and BEVs TOGETHER. The markets for PHEVs and BEVs are radically different.

    The Guardian’s assertion is intended to deceive.

    ‘He warned: “A new global lithium-ion economy is being created, yet any ambitions for the United States to be a leader … continue to only creep forward and be outstripped by China and Europe.”’

    The US doesn’t have Britain’s obsession with being ‘a leader.’

    I submit US action is in line with the actual market place, not the hot air of consultants and governments.

    • Dave Andrews permalink
      November 26, 2021 6:20 pm

      Look at the figures.

      There are about 1.4 billion cars in the world today and that figure is expected to grow to 2 billion by 2050. According to the International Energy Agency (IEA) there were 10.2m EVs (BEV & PHEV) in the world at the end of 2020.

      In May 2021 the IEA published a report on ‘The Role of Critical Minerals in Clean Energy Transitions’ which in addition to noting that EVs require up to 6 times more mineral inputs than an ICEV also said that on its best scenario there would be c, 72m EVs in the world by 2040. Even if they are wrong and a faster roll out of EVs occurs the idea that everyone will be driving EVs in the foreseeable future is laughable.

  13. November 26, 2021 5:09 pm

    We know that fossil fuels come from Decomposing Plants & Animals . . . Bio-Fuels made by nature . . .

    When ‘WE’ make bio-fuels ‘WE’ are making Fossil Fuels. We are emulating Nature, Scientifically, In factories ! . . . 45% of renewables come from forests that we cut down!
    Forests are the Planet’s Best absorber of CO2 . . . Look at deforestation in Cambodia or Brazil . . . they are planting Palm oil to feed . . . You guessed it . . . Bio-Fuels . . .

    Hypocrisy at every turn . . . That’s Environmentalist Propaganda for Ya . . .

    Keep shuffling the chairs on the Titanic . . . Hoping that no one will notice the Slight of hand !

    ALL Electricity . . . From ALL sources is POISON to Planet Earth . . . !!

    31 % of the Electricity produced is lost as HEAT from production, distribution and from exciting the electrons inside the lithium batteries inside those Electric Cars.

    Electric Cars Poison the Planet MORE than Gas Cars . . . We have just NEVER been told.

    Physics 101 . . .

  14. thad333 permalink
    November 26, 2021 9:31 pm

    Worth sending to Nath

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