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China’s EV battery sector frets over supply

Road in Shanghai lujiazui financial center, China. Stock image.

Mines around the world are cutting output due to the coronavirus pandemic, leaving top metals consumer China fretting over supply, as it starts to recover from the initial demand shock that the outbreak inflicted on its economy.

A recent report by Benchmark Mineral Intelligence showed how China has a stranglehold on the EV battery supply chain.

While China only mines 6% of the globe’s manganese, the country is responsible for 93% of its chemical refining. It also responds for 82% of world’s cobalt processing and 59% of lithium.


China relies heavily on manganese and chromium on South Africa, which has extended a coronavirus lockdown until end-April but is now allowing mines to produce at up to 50% capacity.

Several South African miners have declared force majeure, but China had more than 12.5 weeks of chromium ore stocks as of end-March, according to commodity research firm CRU senior analyst Ellie Wang.

The impact of the South Africa lockdown at present is “quite limited,” but an extension would likely lead to disruptions, said Concord Resources research director Duncan Hobbs.

“It’s very difficult to see how South African supplies in either of those markets could be replaced from other sources,” he said.


China has a near total reliance on Democratic Republic of Congo (DRC), the world’s biggest cobalt producer, for the cobalt hydroxide used in EV batteries.

DRC cobalt exports fell 15% fall in the first-quarter and its mining minister has warned that mine shutdowns due to the pandemic would be “catastrophic,” while shipments could be disrupted if truck drivers taking DRC cobalt to ports are subject to quarantine in Zambia.

Cobalt price stood at $30,000 per tonne on the LME on Wednesday.


The global health crisis has deepened financial troubles at one of China’s biggest producers of lithium used in electric vehicle batteries.

The pandemic is set to batter this year’s demand for the material that’s vital in powering new energy transport.

China’s two biggest suppliers, Tianqi Lithium and Ganfeng Lithium, have both issued profit warnings recently.

Tianqi, the country’s top producer of the battery metal, said last week it would post a net loss in the first quarter of 2020.

The Shenzhen-listed miner warned losses for the first three months of the year will amount to between 450 and 510 million yuan ($64-$72 million) compared with net profit of 111 million yuan ($16 million) in 2019. 

It attributed the estimate mainly to weak lithium prices, coronavirus-related disruptions that affected sales, and foreign exchange factors.

Lithium futures contracts on the LME were traded at $8.25 per kilogram as of April 17.

(With files from Reuters and Bloomberg)