'Mineral War' Heats Up
As competition intensifies in the electric vehicle (EV) market, a “supply chain war” over key battery minerals is heating up. Not only battery cell and material companies that directly need minerals, but also automakers and energy companies have jumped into the mineral acquisition battle.
General Motors (GM) in the U.S. announced a plan in January to invest US$650 million (about 860 billion won) in Lithium Americas Corp., a Canadian lithium mine company. It plans to begin large-scale lithium production from a mine in Nevada, the U.S., from 2026. In addition, it has signed supply contracts with leading mining companies including Albermarle Corporation in the U.S. and SQM in Chile, which rank first and second globally in the lithium business, and Nemaska Lithium of Canada. Albermarle and Nemaska Lithium will provide long-term supplies of lithium hydroxide to Ford, while SQM will supply lithium carbonate and lithium hydroxide.
Tesla held a groundbreaking ceremony for a lithium refining plant in Texas, the U.S., on May 8 (local time). The goal is to produce 50,000 tons of lithium hydroxide, equivalent to the level of 1 million EVs, starting in 2025.
The reason automakers are reaching out to battery minerals is to catch the two rabbits of “price competitiveness” and “supply chain construction.” As Chinese electric car manufacturers such as BYD are knocking on the global market with low prices, cost savings through mineral acquisition can lead to a reduction in electric car prices. In addition, according to the “de-China” trend in the global supply chain, building a battery supply chain is essential to achieve its own electric vehicle production plan. The Wall Street Journal diagnosed, “The shortage of electric vehicle batteries is causing automobile companies to directly jump into unfamiliar and dangerous mining businesses.”
Recently, even ExxonMobil, the world's largest petrochemical company, has entered lithium production. WSJ reported on May 21 (local time) that ExxonMobil bought lithium mining drilling rights in Arkansas, the U.S., for US$100 million (about 130 billion won). As the transition to electric vehicles is becoming mainstream, it is diversifying its business.
Korean battery cell and material companies have also started to fully embark on vertical integration of supply chains. LG Energy Solution recently signed a supply contract with Green Technology Metals of Australia, which operates a lithium mine in North America, for lithium ore, which is a key mineral to get lithium hydroxide. By investing in approximately 7.89% of shares, it has agreed to receive 25% of lithium ore production annually for five years. SK on is also set to jointly develop an anode for batteries using graphite refined by Westwater in the US. POSCO INTERNATIONAL will invest US$10 million in a graphite mine in Tanzania and plans to supply the produced graphite to POSCO FUTURE M, a material subsidiary within the group.