September 28, 2022

US hands over control of important metal for electric cars to China | Comment

Tesla electric cars

The geopolitical controversy between China and the United States inevitably has technical components. This was evident in the battle for the fifth generation of cellular telephony (5G), in which the Chinese advanced by making equipment cheaper by upgrading it to a frequency. It clearly begins with another technology that will become important in the coming decades: electric car batteries. In this field, the Americans had an advantage, which they left indescribable.

Li-ion batteries used in automobiles account for almost a third of the cost of production – although the price dropped by almost 90% between 2010 and 2020, the main metal used to make them is responsible for increasing longevity and energy. Lithium is not cobalt. To build the long-distance Tesla model, you need about ten pounds of cobalt.

Two-thirds of metal production is now concentrated in the Democratic Republic of Congo, which has been battling post-independence tribal conflicts. Freeport-McMoRan, the US company responsible for the bulk of the extraction at Tenke Fungurume, Congo’s largest cobalt mine, was sold months ago to China’s molybdenum. According to the New York Times, diplomatic efforts to thwart the sale were in vain. No US company has received government support to terminate the deal.

American betting is on new technologies capable of replacing cobalt and overcoming such unstable country dependence. Companies like Samsung, Panasonic and Tesla are investing in them. Currently, such technologies are still in their infancy on a commercial scale. Meanwhile, China has decided to extend its cobalt extraction to other Congolese deposits. Through negotiations with countries such as Chile, Indonesia or Australia, it guaranteed almost half the control over the processing of essential metals in electric car batteries (except cobalt: nickel, copper, lithium and rare earths). As a result, automakers now have the power to set prices and conditions.

It remains to be seen whether the new generation will have an impact on American betting on non-cobalt batteries. However, one fact seems certain: an acceleration in the adoption of electric batteries is inevitable, with the requirements for reducing greenhouse gas emissions imposed by the Paris Agreement. The International Energy Agency says demand will at least double and probably quadruple, given the use of cell phones and notebooks. The cobalt shortage is projected to occur in 2030, perhaps even earlier, in 2025

The era of fossil fuels brought a generosity to the oil producing countries and sometimes real control over the world economy. The transition to clean energy could create new nations with energy derived from natural resources, this time the metals used in batteries. If it wins the conflict with the United States, China will one day face the OPEC of lithium, nickel and cobalt.