All three companies have one or more lithium projects in Canada, Argentina or Chile, the latter two countries being among the world’s largest lithium producers. Specializing in lithium production, Sinomine owns 5.7% of Power Metals, compared with Zangge Mining’s 14.2% in Ultra Lithium and Chengxin Lithium’s 19.2% in Lithium Chile.
It is important to note that these various reserves are being met by providing development funding to projects run by Canadian juniors, with the aim of providing the Chinese battery industry with a growing supply of lithium from Middle Kingdom companies as soon as possible. Electricity.
For the Canadian government, this involvement of Chinese companies is a “threat to national security [e] to supply chains of essential minerals both domestically and abroad”. To this end, Ottawa has strengthened its investment policy in essential minerals (lithium, but also rare earths, tantalum, cesium, etc.).
These resources are considered critical for making batteries for military equipment such as electric vehicles, advanced electronic devices or fighter jets for the United States, a member of NATO and Canada’s ally. China dominates up to 90% of the world’s rare earth supply, owns the largest electric battery manufacturing plants, but also has interests in several lithium mines in Latin America.
In the past, however, Beijing has used China’s metals dominance to protect its interests, in this case against rival Japan. With tensions rising between Washington (and its European allies and Canada) and China in recent years, the former is more concerned than ever about its dependence on the Middle Kingdom.
The beginning of a wider boycott?
For junior miners affected by the Canadian government’s recent decision, and those who could follow if Canada does not change its approach, the main challenge will be finding other partners to fund their projects.
In the mining industry, so-called junior companies often have to partner with companies with more financial resources to complete the projects they work on. If they can’t find this funding, some juniors decide to sell the project after initial research.
In Africa, for example, several deals were signed last year between Australian juniors and Chinese companies for lithium extraction in Mali and the DRC. This is Australia’s Leo Lithium’s Malian Coulamina project, funded by China’s Confeng, and Australia’s AVZ’s Manono project, co-financed by China’s Confeng Lithium (again) and Suzhou Cath Energy Technologies.
However, at the time, there were trade tensions between the two home countries of these companies (Australia and China), but neither government took action against these mining deals. However, Canberra has already blocked China’s Yibin Tianyi’s purchase of a stake in AVZ Minerals last April, as well as a similar investment by China’s state-owned Boogang Group in Northern Minerals, which operates rare earth deposits in Western Australia.
In addition to less serious trade tensions this year, there are now geopolitical tensions related to the rapprochement between Australia and the United States. It is noteworthy that in 2021, the agreement to buy nuclear submarines from France was terminated.
If these tensions escalate between countries with diverging interests, it cannot be ruled out that Australian officials will continue to engage in geopolitical battles with Canada and the United States over strategic metals including lithium and rare earths, with potential consequences for African production in the future. Countries.
These are resources in Africa and are poised to be exploited even more significantly. According to the Ecofin Pro database, it collects 25 lithium projects in Africa, 15 operated by Australian companies and 3 operated by Canadian companies.
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