U.S. oil giant ExxonMobil plans ＂lithium transition＂, difficult to bypass China
Oil giant decided to enter the lithium industry! Reuters news agency on August 1, citing sources familiar with the matter, said U.S. oil and gas producer ExxonMobil is with Tesla and other automakers and Samsung and other battery suppliers on lithium supply negotiations. This news is not empty, in July Reuters reported that ExxonMobil has agreed to study with the U.S. German light technology companies in Arkansas to develop more than 24.7 square kilometers of lithium-rich brine. Some analysts believe that, as a lithium battery industry, "layman", ExxonMobil anxious to enter the game, reflecting both the traditional industry giants in the face of dramatic changes in the industry's "self-revolution", but also reflects the face of China's lithium battery industry chain advantage, the anxiety of Western enterprises.
Energy giants "head" to set off waves
Bloomberg reported on August 1, ExxonMobil and related enterprises are still in the early stages of discussion, because "ExxonMobil simply do not have the means to produce this battery metal. However, these signs do show ExxonMobil's growing interest in clean energy business. And, to some extent, the move represents the current trend of Western oil and gas giants seeking to expand their businesses involving lithium resources and capitalize on the surging demand for EV battery use to diversify beyond fossil fuels.
"Any industry is driven by demand, and there is now a clear trend toward the development of electric vehicles. ExxonMobil as a supplier of energy to fuel vehicles, if not transforming the customer market will become smaller and smaller", real lithium research chief analyst Mo Ke told the "Global Times" reporter, the traditional energy supplier of ExxonMobil transformed into a lithium resource supplier, or further transformation for power battery suppliers is very likely, the possibility of "Because if it doesn't revolutionize its own life, others will revolutionize its life."
However, experts believe that ExxonMobil's transformation will not yet make significant waves in the industry. China Chemical and Physical Power Industry Association, the former Secretary-General Liu Yanlong, August 2, analysis of the reporter said that ExxonMobil has a strong financial strength, but also able to control some mineral resources, but the global key lithium battery metal processing enterprises are still mainly operated by the Chinese enterprises, so in the short term, ExxonMobil's entry into the industry will not bring much impact.
Liu Yanlong believes that from the overall industrial chain, the United States has some lithium mining resources, but the amount of mining at this stage is not much, and the industrial layout is not perfect. Ink analysis, the U.S. local lithium battery industry is basically supported by Japanese and South Korean companies, but the production chain is mainly dependent on materials purchased from China, and then shipped to the United States for production. In the lithium battery industry is becoming more and more important at the moment, the United States mainland only lithium battery factory, and does not have a lithium battery industry chain.
Chinese enterprises dominate the lithium industry chain
"The global battery industry chain can not be stripped of China." A recent article in the British magazine The Economist wrote. The article analyzes that to meet projected global demand, the supply of minerals needed to make lithium-ion batteries by 2030 must grow by 1/3 per year, and China is the world's No. 1 battery metal processor and battery producer.
Even outside of China, many processes in the industry chain are dominated by Chinese companies, according to The Economist. U.S. policymakers see this as a major threat to the resilience of the U.S. supply chain. This makes lithium battery technology has become one of the most important industrial "battlefield" in the competition between the United States and China. The U.S. is reaching small trade agreements with some of these countries to gain access to these minerals and production capabilities.
The New York Times recently reported that Ford has a very strong desire to sell electric cars equipped with lithium iron phosphate batteries in the U.S. market, but now really have the technical ability to mass produce the product is a Chinese company.
Liu Yanlong told reporters that Ford's case shows that China is a global leader in lithium industry chain, but the U.S. does not want Chinese companies to control its market, so the introduction of a variety of incentives to establish a local industrial advantage or supply chain. However, the construction of the project will take more than two to three years, and even after the completion of the United States due to lack of experience and technology, may not necessarily have a competitive advantage in terms of cost, quality and so on.
In addition, Chinese companies dominate the production of key battery components, with cell component production accounting for at least half of the world's output, and more than 70 percent in some categories. The rest of the production capacity is concentrated in South Korea and Japan. Together, these three East Asian countries account for more than 92 percent of midstream battery component production capacity. Even if the U.S. had access to enough processed minerals, achieving its goals would require large-scale deployment of South Korean and Japanese battery manufacturing technology to North America.
Battery supply chain, Asia is key
The Economist reported that the future outcome of the game between the United States and China on the lithium battery industry depends on Asia, because most of the battery supply chain is here. And Chinese companies are adding Southeast Asia to the battery supply chain. According to Thailand's The Nation on August 2, Energy Absolute, a Thai energy company, is working with two major Chinese battery makers, Yi-Wei Lithium and Xinda, to conduct a feasibility study on building a battery factory in Thailand. Both Chinese companies are interested in further expanding into the Thai market and creating a large-scale battery factory to meet Thailand's and ASEAN's battery demand.
"Indonesia's vast nickel deposits are open to the nickel-hungry electric-vehicle industry as Chinese companies navigate the difficult refining process." Nickel ore processing plants are now being built all over Indonesia to provide raw materials for EV batteries, whereas five years ago there wasn't even a single such plant in the country, thanks to technological breakthroughs made by Chinese firms, the Wall Street Journal said.
This means that in the global race for key minerals for the energy transition, the U.S. action to reduce dependence on China's supply chain suffered a blow, the report said. While the Biden administration has pushed hard to diversify the energy supply chain, in the case of nickel, Chinese firms have become increasingly capable of acquiring and processing the resource. In recent years, Chinese companies have opened at least three mining processing plants in Indonesia that specialize in servicing electric vehicles.
According to The Economist, the overwhelming dominance of Chinese firms comes not only from admirable expertise. According to some mining executives and experts, the advantage of Chinese companies also comes from having the ability to act quickly and take risks. Western companies engaged in the business of mining and processing nickel are few in number and spend a disproportionate amount of energy on preliminary research and preparation. Japanese mining company Sumitomo Metal Mining pulled out of a nickel-processing project last year, and the feasibility study for the project has surprisingly been dry since 2012.