As tensions rise in the technology war between China and the West, China is strategically increasing investments in critical minerals abroad through its Belt and Road Initiative (BRI).
The aim is to secure a steady supply of raw materials essential for the production of batteries and solar panels.
While the US and the EU are seeking to build alliances to counter China’s dominance in the energy transition’s critical supply chain.
China is aggressively investing billions of dollars in minerals and metals, focusing on regions like Africa, Latin America, and the Middle East.
A recent report by the Green Finance & Development Center (GFDC) at Fudan University reveals. That China’s overseas investments in metals and mining surged by an impressive 131% in the first half of 2023, totaling over $10 billion.
The BRI has played a pivotal role in facilitating this growth. With Chinese engagement in metals and mining showing a significant presence in African and Latin American countries.
China’s Belt and Road Initiative Spurs Significant Overseas Investments in Minerals and Metals
China already holds significant shares of global mining sources and maintains control over more than 50% of global capacity in material processing for lithium, nickel, cobalt, and graphite.
The country’s strategic focus on lithium and copper mining and processing is evident through various acquisitions and agreements in countries like Mali, Saudi Arabia, and Zimbabwe.
The BRI’s expansion during the first half of 2023 involved 103 deals worth a total of $43.3 billion. With private sector enterprises like Huayao Cobalt and CATL playing key roles. Going forward, China anticipates further growth in investments, especially in renewable energy and related technologies.
However, while China strengthens its grip on critical minerals supply chains. The US-based Bank UBS predicts China’s control over almost one-third of the global lithium supply by 2025.
Mines under Beijing’s control, both within China and Africa, are expected to witness a remarkable threefold increase in lithium output from 2022 to 2025.
A similar trend is observed for cobalt. With China’s share projected to reach 50% of global output within the next two years.
As global investments in minerals soar, the International Energy Agency (IEA) notes that diversification of supply remains a challenge.
Limited diversification could hinder the industry’s ability to meet the anticipated surge in demand for critical minerals.
China, the Democratic Republic of Congo, and Indonesia continue to dominate a substantial portion of the critical raw material supply. With China holding a significant position in refining operations.
China’s dominance in the critical minerals market raises both economic and strategic concerns for the global energy transition. Prompting countries to reassess their supply chain strategies to ensure sustainable and resilient sourcing of essential raw materials.