Japan is aiming to decrease its dependence on China for the minerals used in electric vehicle (EV) batteries. It’s looking to Australia and Canada instead.
In June, representatives from Japan and Australia held a meeting to discuss the development of a mineral supply chain that is not reliant on China. The two countries share concerns about China, making them ideal partners in this endeavor.
In addition, Japan’s economy minister Yasutoshi Nishimura visited Canada in September to sign an agreement for cooperation in building an EV supply chain. To encourage Japanese companies to develop material sources in Canada, the governments of both countries are offering subsidies.
Currently, China dominates the global processing of critical battery minerals such as lithium and cobalt. In response, the United States has implemented the Inflation Reduction Act, incentivizing EV buyers with tax credits if certain production criteria are met.
The act requires a significant portion of the battery materials to come from either a US supplier or a country with a free trade agreement. Furthermore, to qualify for tax credits by 2027, 80% of the EV’s battery materials must come from such countries.
Australia’s booming rare mineral industry
Australia is already the largest exporter of lithium on the planet, with Western Australia housing most of the reserves.
According to CarExpert, the Australian government anticipates doubling lithium exports over the next five years. Current export destinations include South Korea, Germany, Norway, Spain, and the United States.
Australia has also begun taking steps to refine lithium. The nation’s first-ever lithium refinery opened in the Kwinana Industrial Area in Western Australia in May 2022. Kwinana is about 38 km (24 miles) south of Perth.
As Japan turns to Australia for EV raw materials, Australian mining companies have already established agreements with leading car manufacturers to provide them with the necessary raw materials for battery production.
Queensland Pacific Materials (QPM) entered into a significant contract worth US$69 million (AU$103 million) with General Motors (GM) in October of last year. This partnership ensures the supply of nickel and cobalt required for the construction of Ultium lithium-ion battery packs.
Furthermore, in April 2022, GM secured a separate deal with the Swiss company Glencore to source cobalt from the Murrin Murrin operation. The Murrin Murrin mine is located in a remote region of Western Australia, about 45 km (28 miles) east of Leonora.
In addition to benefiting from anti-China trade policies, Australia will also benefit from recently announced mineral export restrictions by Indonesia and Chile. These export restrictions will reduce competition for Australian minerals.
Image Source: Pralhad Joshi, https://shorturl.at/bEV19
