China is betting on the “oil” of the future or new oil, denomination used by the World Economic Forum, recurrent to designate critical minerals. The “Asian giant” was late in the era of hydrocarbons, which was the one that had fed the economy over the past decades, but now wants to act and use the new energy regime. The situation is completely different from the past. Now China is the second greatest power in the world and has financial and economic muscles to take control of critical minerals that become new oil. Minerals that will be formed (already formed) to transport this new era. For this, Beijing takes control of several key assets abroad The geopolitical situation will become even more difficult. Nevertheless, the Chinese acquisitions of mining abroad have reached their highest level over a decade, in the struggle for the raw material that supports the world economy in the face of a growing geopolitical stress.
Last year they closed 10 agreements According to the S&P data analysis, worth more than $ 100 million, the largest volume since 2013, according to the analysis of S&P data and MergerMarket. An independent study of the Institute of Griffith Asia showed that last year This was the most active for Chinese investments and construction abroad, at least since 2013The huge demand for raw materials in the country (this is the largest consumer of most minerals) implies that their mining companies already have a long history of investment abroad, knowledge and experience that they use to control new assets that can be vital in the future.
Analysts and investors approve in statements Financial times that an increase in negotiations of this type of agreement is reflected partially China’s efforts to anticipate the deterioration of geopolitical climate and economyTwo threats that may impede the entrance of Chinese firms in foreign countries or even “reduce” direct strange investments in the worst case. For many years, Beijing has been introducing the policy of the “long -plated”, and in many cases anticipates the scenarios thanks to the mass purchase of oil (when the price falls or the war falls), the accumulation of grain or the purchase of a large amount of gold. Now Beijing wants to control the supply of what will be minerals that will move around the world.
Michael SkerbThe founder of the private private group, Appian Capital Capital, said that over the past 12 months there has been “more activity, because Chinese groups believe that they have such a short -term opportunity … They are trying to indicate a lot of mergers and acquisitions before the geopolitical situation will be difficult”, as shown in statements Financial timesField “In the coming years, we will probably continue to see a good level of negotiations of Chinese mining companies”Says Richard Hors-Teilor, director of global metal and mining Standard Chartered.
Christophe was uneasy, Chinese investment expert abroad and director of the Griffith Asian Institute, indicates that in the framework of the strip and initiative on the route, symbolic projects of foreign policy, transport and infrastructure of Xi Jinping were usually insignificant. For comparison, Chinese investments in prey and resources abroad remained at a very high level. This, according to the Nedela, agrees with the orientation of China to production with high technologies, including renewable batteries and energy. But this also reflects that investors have become more sophisticated in their approach to investments and operations. China dominates the processing of the most important minerals, such as rare earth lands, lithium and cobalt, but it must import most of the raw materials.
However, China is already a great force in this sector. The US Department of Energy through the Energy Information Administration (EIA) was a recent note that China controls the global battery supply and dominates the interregional trade in minerals. Analysis of three key minerals necessary for batteries (Graphite, lithium and cobalt), we can say that China has almost absolute control. These minerals are extracted from natural and synthetic sources, processed for the manufacture of battery materials and are subsequently used for the production of batteries and components with solid trade at each stage. As world demand for electric cars, energy storage and other energy technologies increase, also increases the importance of these minerals and materials.
Lithium is carried out by removing brine or hard maid production; Cobalt is found mainly as a by -product of nickel and copper production; And the graphite is extracted in the form of a natural mineral or synthetically produces from a rupture and cola. China produces about 18% (33,000 tons) of lithium, extracted around the world in 2023.And Chinese companies control 25% of the global mining throughput of lithium.
According to the TearLine project of the National Agency for Geospace Intelligence (NISA), Chinese companies have significant investments in numerous projects for extraction and extraction in Argentina, which gives access to the triangle of lithium, The area in Argentina, Bolivia and Chile, which contains 50% of the world of lithium. According to the US Geological Service; While the United States did not produce natural graphite this year. Chinese companies have 80% of cobalt production in Congo-Kinshasa, where more than half of the world production of cobalt is concentrated.
After production, gross batteries are sent around the world for use as raw materials in processing. China represented 46% of world trade in importing minerals for batteries in 2023, In accordance with the data of the UN ComtradeAustralia, a world producer, sent almost all of her export only to China. China, Australia and the rest of Asia and Oceania (in particular, India and Japan) represented 71% of world trade in gross minerals for batteries.
Mineral processing and trade
Moreover, “China processes more than 90% of world graphite, and in 2022, Chinese companies represented more than two -thirds of global capacity for cobalt and lithium. China imported 20% of the minerals of world minerals in 2023, mainly laying cobalt in Africa. The same year ,,,, in the same year. China exported 58% of world batteries processedBasically, synthetic graphite, to the rest of Asia and Oceania. China began to introduce restrictions on the export of graphite products related to the production of electrodes in 2023, and we foresee that these restrictions lead to a decrease in the export of graphite from China in 2024 and 2025, “” stand out from the EIA. In addition, processed batteries are used to produce batteries that vary depending on their chemical composition. China represented 53% of the export trade in worldwide trade for battery materials in 2023.Field
Subsequently, the battery materials are used to produce components such as electrodes, electrolytes and separators. For example, the lithium -cucumber of the battery usually includes a graphite anode, lithium -cathode and an electrolyte of dissolved lithium -soli. In 2022, China produced 85% of anodes, 82% of electrolytes, 74% of separators and 70% of cathodes in the world. China represented 74% of world exports of batteries and components in 2023. In the same year, China controlled almost 85% of the global production of battery cells in terms of cash value.
While China controls everything, The United States and many European countries are trying to reduce their dependence on China For these key metals for the production of all types of products, from batteries for electric vehicles to semiconductors and windshields, and develop alternative supply chains.
Analysts and bankers assure Financial times That Chinese companies are already large experts in the acquisition of mining assets of their Western rivals in recent years, often ready to take a long look at the assessment and invest in more risky jurisdictions. “The growing sophistication was observed in the mergers of the mergers and acquisitions of Chinese buyers abroad,” says Sherb.
Everything comes out of Beijing
“The China government chose a buyer for each process of selling assets and supporting this group. What has developed over the past three or four years is that the government allows Chinese groups to compete with each other. This implies that they are no longer afraid to lose before the West, ”he added. John Meyer, an analyst at the Corical SP Angel advisory company, said that China closes the agreements “to keep the West from certain critical materials that dominate.”
“Each time someone is approaching lithium mining, the Chinese are in a hurry with a checkbook.” The most active Chinese mountain groups in agreements abroad include CMOC, MMG and Zijin Mining. Chinese financial institutions also provided billions of loans for projects for mining and processing in developing countries. Timothy Foden, co -author of the Bois Schiller Flexner International Arbitration Group, which operates in several African countries, said that Chinese companies are positioning themselves to benefit from nationalism resources in countries such as Mali.
Some military governments in Africa tried to take control of Western assets of mining and demand large dividends or payments. According to the lawyer, Chinese companies are usually ready to accept a less profitable agreement if they can take care of asset management.
