China recently rattled the world’s electric vehicle supply chains by announcing new export controls on graphitepledoo casino, a key component of lithium-ion batteries. If China uses the export controls, which take effect on Dec. 1, to reduce exports of graphite or to favor Chinese-owned companies operating abroad, it could slow down efforts to scale up advanced battery manufacturing globally.
Welcome to the geopolitics of the clean energy transition. Unlike in the 20th century, when China was largely a bystander in petroleum politics, the country has achieved new geopolitical significance by scaling up investments in clean energy manufacturing and the critical minerals that work requires.
The supply chains for many critical minerals, not just graphite, run through China. In the case of materials critical to the production of lithium-ion batteries, which power electric vehicles, the consulting group Benchmark Mineral Intelligence estimated that China controlled 58 percent of the global production of lithium compounds in 2022, 69 percent of nickel sulfate, 69 percent of synthetic graphite, 75 percent of cobalt, 95 percent of manganese and 100 percent of spherical graphite. China plays a similarly outsize role in the supply of materials used in solar panels and wind turbines.
But this isn’t simply a story about China’s geological good fortune. The country’s reserves of most of these minerals aren’t actually that large. Instead, it is a story of strategy. Over the past decade, China has systematically invested in overseas and domestic mines that feed into Chinese-owned refineries, where raw materials from around the world are processed into the high-grade materials needed for advanced manufacturing.
China justified the new export controls on graphite as a national security measure. But most observers read China’s move as a warning shot in an increasingly high-stakes trade skirmish, as China, the United States and the European Union explore the new geopolitics of advanced manufacturing and a clean-energy transition. Three days before China announced the export controls on graphite, the Biden administration restricted exports of computer chips used in artificial intelligence applications to China.
China’s leverage over the global critical minerals supply explains why the particulars of the Inflation Reduction Act are so important. The law, passed in August 2022, is not just the most consequential piece of climate and energy legislation in U.S. history; it is also designed to drive investment in domestic manufacturing and in supply chains that do an end run around China. It does this, in part, by providing generous incentives for domestic production of critical minerals, battery components and batteries.
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