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China The World’s Biggest producer Of Graphite Restricts Exports As It Escalates A Global Tech War; How China Has Taken The World Hostage When It Comes To Critical Minerals?

China is seriously upping its strategies when it comes to global tech war; in an era defined by technological advancements and the transition to cleaner energy sources, the world's dependence on critical minerals has become increasingly apparent. These minerals, including rare earths, cobalt, and lithium, underpin essential industries such as electric vehicles, aerospace, renewable energy, and high-tech defence. Among the prominent players in this global landscape, China has held a dominant position, supplying a substantial portion of these vital resources.

China, the world’s largest producer of graphite, has initiated export restrictions on this crucial mineral used in the manufacturing of electric vehicle (EV) batteries, citing national security concerns.

The move comes shortly after the United States imposed additional restrictions on semiconductor exports to Chinese companies.

However, the tit-for-tat measures between China and Western countries exemplify the consequences of protectionist actions, where every action provokes a reaction, as noted by Stefan Legge, head of tax and trade policy research at the University of St Gallen in Switzerland.

China, dominating the global production and processing of graphite, has mandated export permits for synthetic graphite material, encompassing high-purity, high-strength, and high-density variants, as well as natural flake graphite, effective from December.

The Institute for Energy Research in Washington, DC, reports that automakers are actively seeking alternative sources of graphite to secure a stable supply chain, particularly as demand for EV batteries continues to outpace other uses of the material.

China, Graphite

Global sales of EVs, encompassing battery-powered and hybrid vehicles, have surged, with over 10 million units sold in the previous year, a 55% increase from 2021, and an estimated nearly 14 million vehicles projected for the current year, as per the International Energy Agency.

The market for graphite used in batteries has experienced a remarkable 250% global growth since 2018, with China emerging as the world’s primary graphite producer, contributing to approximately 65% of the total global production, according to the US Geological Survey.

Notably, graphite finds applications beyond EVs, being essential in the semiconductor, aerospace, chemical, and steel industries.

China Controlling The Tech War
China’s imposition of export restrictions coincides with mounting international pressure on its trade practices and commercial activities; it has been actively engaged in a tech war with the United States and its allies in Europe and Asia, primarily concerning access to advanced semiconductor technology and equipment.

China’s dominance in the global supply chain of critical minerals for EV batteries is profound; it refines 60% of the world’s lithium and 80% of the cobalt, according to the US Department of Energy, cementing its influence over these essential resources.

Europe Aims To Move Away From China
Europe is intensifying its efforts to secure supply chains for critical minerals and reduce its dependence on China; hence, in this regard European lawmakers are acting swiftly to address the vulnerabilities associated with critical minerals, which are pivotal for the energy transition and advanced defence technologies.

These actions reflect a growing awareness in Europe of the need to diversify its sources due to concerns about strategic risks; this urgency was reinforced when China restricted exports of gallium and germanium, two key inputs for chip manufacturing, in response to U.S. measures.

China’s recent export restrictions on specific types of graphite, a crucial component in electric vehicle battery production, have further stressed the risks of overreliance on a single source.

While other nations, such as Japan and the United States, have taken steps to mitigate risks in the critical mineral sector, the European Union (EU) is coming to terms with its own vulnerabilities at a later stage.

Tom Moerenhout, a research scholar at Columbia University’s Center on Global Energy Policy, noted that Europe has lagged behind in addressing critical mineral issues, lacking a coordinated and fiscally potent approach similar to the Inflation Reduction Act.

As Brussels formulates its strategy, Australia’s Resources Minister Madeleine King has urged European carmakers to invest more rapidly in Australia’s critical minerals sector.

These minerals, including rare earths, cobalt, and lithium, are essential for various industries, including aerospace, renewable energy, and technology.

Joris Teer, a strategic analyst at the Hague Centre for Strategic Studies, accentuated the significance of critical minerals, stating that they are the “skeleton of the world economy” and underpin technologies such as MRI machines, drones, jet fighters, and wind turbines.

While concerns about China’s dominance in critical mineral supply chains have persisted since at least 2010, Europe’s economic ties with China deepened during that time.

Nonetheless, European efforts to address these dependencies are gaining momentum, with the introduction of legislation and partnerships with key allies and mineral-rich countries.

Brussels is now part of the Minerals Security Partnership (MSP), which includes 14 members such as the United States, the United Kingdom, Australia, Canada, and South Korea, aiming to strengthen and expand critical mineral supply chains.
Additionally, Washington is working on an agreement with Brussels that would allow European firms to benefit from IRA tax credits, a source of previous tension.

Through the Global Gateway, Europe’s response to China’s Belt and Road Initiative, Brussels is negotiating agreements with the Democratic Republic of the Congo and Zambia, focusing on the development of mineral value chains; Congo is a dominant global producer of cobalt, while Zambia is rich in copper.

Furthermore, Brussels is striving to reduce its dependence on critical minerals with the Critical Raw Materials Act, which sets ambitious targets for domestic sourcing, processing, and production. At the same time, European officials are also advocating for a buyers club that may include partners like Australia, Canada, and the United States.

The Last Bit,
Europe’s awakening to the imperative of diversifying its sources of critical minerals is a reflection of the evolving complicated geopolitical terrain.

As it accelerates efforts to secure these vital resources, the EU is working to mitigate the strategic vulnerabilities associated with a heavy reliance on China.

The critical minerals sector, often considered the “skeleton of the world economy,” is central to the global transition to clean energy and technological advancements.

Hence, currently, China’s position has reinforced the idea that by forging partnerships, enacting legislation, and setting ambitious targets, Europe wants to reduce its critical mineral dependence and safeguard its energy transition and high-tech defence.

 

naveenika

Writing is not just a pastime for me; it's a calling! There is something about the power of words - they can move people, inspire change, and bring about new ideas. With nearly 15 years of experience in the corporate sector, I have understood the therapeutic value of writing, using it as a means to explore my thoughts and articulate my views on various topics. Being passionate about writing, I strive to create content that informs and enriches the lives of my readers. I am grateful for the time they spend reading my work and aim to make every word count.

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