Europe’s lithium quest hampered by China and lack of money
By Alvaro VILLALOBOS
Paris (AFP) June 20, 2025
Europe’s ambition to be a world participant in decarbonised transportation arguably is dependent upon sourcing lithium overseas, particularly in South America.
Even the bloc’s broader power safety and local weather targets may depend upon securing a gradual provide of the important thing mineral, utilized in batteries and different clear power provide chains.
However Europe has run right into a trio of obstacles: lack of cash, double-edged rules and competitors from China, analysts instructed AFP.
China has a significant head begin.
It presently produces greater than three-quarters of batteries offered worldwide, refines 70 p.c of uncooked lithium and is the world’s third-largest extractor behind Australia and Chile, in line with 2024 knowledge from the US Geological Survey.
To achieve a foothold, Europe has developed a regulatory framework that emphasises environmental preservation, high quality job creation and cooperation with native communities.
It has additionally signed bilateral agreements with about 15 nations, together with Chile and Argentina, the world’s fifth-largest lithium producer.
However too typically it fails to ship in the case of funding, say consultants.
“I see numerous memoranda of understanding, however there’s a lack of motion,” Julia Poliscanova, director of electrical automobiles on the Transport and Surroundings (T&E) assume tank, instructed AFP.
“Greater than as soon as, on the day that we signed one other MoU, the Chinese language had been shopping for a whole mine in the identical nation.”
The funding hole is big: China spent $6 billion on lithium tasks overseas from 2020 to 2023, whereas Europe barely coughed up a billion {dollars} over the identical interval, in line with knowledge compiled by T&E.
– Lagging funding –
On the similar time, the bottleneck in provide has tightened: final 12 months noticed a 30 p.c enhance in world demand for lithium, in line with a latest report from the Worldwide Power Company (IEA).
“To safe the availability of uncooked supplies, China is actively investing in mines overseas by means of state-owned corporations with political help from the federal government,” the IEA famous.
China’s Belt and Highway Initiative funnelled $21.4 billion into mining past its shores in 2024, in line with the report.
Europe, in the meantime, is “lagging behind in funding ranges in these areas”, stated Sebastian Galarza, founding father of the Centre for Sustainable Mobility in Santiago, Chile.
“The shortage of a transparent path for growing Europe’s battery and mining industries implies that hole might be crammed by different actors.”
In Africa, for instance, Chinese language demand has propelled Zimbabwe to turn out to be the fourth-largest lithium producer on the planet.
“The Chinese language let their cash do the speaking,” stated Theo Acheampong, an analyst on the European Council on International Relations.
By 2035, all new automobiles and vans offered within the European Union should produce zero carbon emissions, and EU leaders and trade would really like as a lot as doable of that market share to be sourced regionally.
Final 12 months, simply over 20 p.c of latest automobiles offered within the bloc had been electrical.
“At the moment, solely 4 p.c of Chile’s lithium goes to Europe,” famous Stefan Debruyne, director of exterior affairs at Chilean personal mining firm SQM.
“The EU has each alternative to extend its share of the battery trade.”
– Shifting provide chains –
However Europe’s plans to construct dozens of battery factories have been hampered by fluctuating client demand and competitors from Japan (Panasonic), South Korea (LG Power Resolution, Samsung) and, above all, China (CATL, BYD).
The important thing to locking down long-term lithium provide is nearer ties within the so-called “lithium triangle” fashioned by Chile, Argentina and Bolivia, which account for almost half of the world’s reserves, analysts say.
To encourage cooperation with these nations, European actors have proposed improvement pathways that will assist set up electrical battery manufacturing in Latin America.
Draft EU rules would enable Latin America to “reconcile native improvement with the export of those uncooked supplies, and never fall right into a purely extractive cycle”, stated Juan Vazquez, deputy head for Latin America and the Caribbean on the OECD Growth Centre.
However it’s nonetheless unclear whether or not serving to exporting nations develop full provide chains makes financial sense, or will in the end tilt in Europe’s favour.
“What curiosity do you will have as an organization in establishing in Chile to supply cathodes, batteries or extra subtle supplies if you do not have a neighborhood or regional market to produce?” stated Galarza.
“Why not simply take the lithium, refine it and do all the things in China and ship the battery again to us?”
Pointing to the automotive custom in Mexico, Brazil and Argentina, Galarza steered a solution.
“We should push rapidly in direction of the electrification of transport within the area so we are able to share in the advantages of the power transition,” he argued.
However the highway forward seems to be lengthy.
Electrical automobiles had been solely two p.c of latest automotive gross sales in Mexico and Chile final 12 months, six p.c in Brazil and 7 p.c in Colombia, in line with the IEA.
The small nation of Costa Rica stood out as the one nation within the area the place EVs hit double digits, at 15 p.c of latest automotive gross sales.
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