Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, on November 3, Industry Canada required three Chinese companies (China Mining Resources, Shengze Lithium and Zangge Mining) to divest their investment in key Canadian mining companies on the grounds of national security. In the emergency conference call after the incident, China Mining Resources officials said that it seems there is a trend of comprehensive restrictions on China-funded enterprises. Analysts in the financial market revealed that, in the future, China-funded companies will no longer be able to obtain any lithium resources in Canada or the United States, or acquire any companies listed in these two countries. Also, Chinese capital can only acquire up to 10 percent of the shares of lithium resource companies in Australia. In the absence of domestic lithium resources, Chinese companies cannot control the price of critical raw materials such as lithium concentrate. Thus are in a passive state in the upstream and downstream pricing game. China produces about 75 percent of the world’s lithium-ion batteries, but China only accounts for less than 20 percent of the global lithium resources. Most overseas lithium companies are listed in the US, Australia and Canada. This means that lithium resources have become the weakest link in China’s electric vehicle industry supply chain.
Source: Sina, November 3, 2022