International

Global lithium strategies accelerate amid supply chain vulnerabilities and Chinese dominance

Thursday, 13 November 2025 5:02AM UTC

As the global shift towards renewable energy intensifies, countries worldwide are aggressively developing domestic lithium capabilities to reduce reliance on China amid rising geopolitical tensions and supply disruptions, highlighting a pivotal shift in securing the essential mineral for future battery production.

The global push towards renewable energy and electric vehicles has sharply escalated demand for lithium, an essential mineral for battery production. This surge has exposed significant vulnerabilities in the lithium supply chain, particularly due to the heavy concentration of processing capacity in China. Despite producing only around 13% of the world's raw lithium, China controls roughly 60% of global lithium refining capacity. This imbalance has driven governments worldwide to bolster their strategic efforts for lithium supply chain security, recognising the risks posed by geopolitical tensions and reliance on a single dominant player.

A major bottleneck exists as traditional lithium-producing regions like Australia mainly extract raw materials but lack the downstream processing infrastructure. Consequently, raw lithium concentrates often must be exported to China for conversion into battery-grade chemicals before being shipped back to manufacturing centres overseas. This dependency increases exposure to supply disruptions and trade restrictions, raising alarm as the global electrification movement continues to accelerate. Projections indicate lithium demand could soar by up to 400% by 2030, highlighting the urgent need for diversified, resilient supply chains.

Governments have increasingly deployed a range of financial incentives and direct investments to develop domestic lithium capacity. In the United States, the Bipartisan Infrastructure Law has earmarked over $3 billion for critical mineral projects, including extraction, processing, and recycling, with the aim of catalysing around $16 billion in combined public-private investment. These measures include conditional loan commitments, tax credits, research grants, infrastructure funding, and risk-sharing to attract and secure capital for projects that require hundreds of millions or even billions in upfront investment and long lead times.

For example, the U.S. Department of Energy (DOE) has spearheaded major loan guarantee programmes to mitigate financing risks for lithium projects, such as the Thacker Pass lithium mine in Nevada. The government recently took an unprecedented step by acquiring a 5% equity stake in Lithium Americas, the company developing Thacker Pass, accompanied by a $435 million federal loan and deferred loan payments. This project alone has the potential to supply lithium for over 800,000 electric vehicles annually, a critical capacity expansion aligned with America's strategy to reduce dependence on Chinese imports. In August 2025, the U.S. administration also proposed nearly $1 billion in new funding focused on domestic critical mineral development, including battery manufacturing and recycling technologies, further signalling an aggressive pivot towards supply chain independence.

Canada is likewise harnessing its lithium brine resources with policies supporting innovative extraction innovations and expedited regulatory approvals. Projects such as E3 Lithium’s Clearwater facility in Alberta are leveraging proximity to existing oil and gas infrastructure to establish cost-efficient lithium carbonate production, aiming to serve North American battery manufacturers while adding value domestically.

In Europe, the launch of the Critical Raw Materials Act has marked a significant policy shift, backed by the European Investment Bank's recent funding support for lithium projects. The continent is advancing capacity expansions including Portugal’s Barroso spodumene project and emphasises stringent environmental compliance to ensure sustainable development. Despite these efforts, Europe faces substantial battery supply deficits, with studies projecting a lithium-ion battery shortfall of around 70 GWh in 2025, underscoring the need for further upstream investment in raw materials and processing.

Aligned international partnerships are also proving crucial. The Minerals Security Partnership, led by the U.S. Department of State, brings together allied nations to coordinate supply chain development, share technical expertise, pool investment strategies, and mitigate geopolitical risks through diversification. Trade agreements increasingly embed provisions on critical minerals, facilitating technology transfer and long-term supply relationships, which are vital to secure stable lithium access.

Nevertheless, the lithium market remains volatile and complex. Spot prices have oscillated significantly since their peak in late 2022, driven by supply-demand imbalances and speculative trading. The recent suspension of operations at several Chinese lithium mines, including a major facility operated by battery giant CATL in Yichun due to an expired license, caused an immediate surge in lithium prices and stock gains for lithium producers internationally. This production halt, reportedly part of a broader Chinese government crackdown on overcapacity, has heightened concerns about future supply tightening. China’s dominant refining position, controlling around 60% of global capacity, and its integrated mining and battery production infrastructure accentuate the global repercussions of such domestic production pauses.

These events highlight the vulnerabilities of a geographically concentrated supply chain amid shifting industrial policies. Market participants and policymakers alike acknowledge that robust government support is vital to accelerate the scaling of domestically integrated lithium supply chains. Yet, such interventions need to balance market dynamics carefully to avoid inefficiencies; instead, transparent price mechanisms and technological innovation must underpin long-term supply stability.

Crucially, environmental and social considerations are now integral to lithium sector development. Governments increasingly demand adherence to sustainable extraction practices, water conservation, waste management, indigenous rights consultations, and biodiversity safeguards. Advanced technologies, such as Direct Lithium Extraction (DLE), which reduces water usage and environmental footprint compared to traditional evaporative methods, are receiving targeted government backing to facilitate responsible growth in new lithium projects.

Beyond traditional producers, emerging markets in South America and Africa are stepping up efforts to participate more fully in the lithium value chain. Countries like Chile and Argentina are enforcing local processing mandates and fostering technology transfer partnerships, while African nations, including Zimbabwe and Namibia, are boosting geological surveys, capacity building, and infrastructure improvements to attract investment and secure domestic benefits.

Despite these positive movements, substantial challenges remain in regulatory coordination and policy stability. Multiple government agencies must streamline permitting processes and harmonise standards to avoid costly delays. Additionally, balancing national industry protection with international cooperation and open markets requires careful policy calibration to prevent trade conflicts while securing critical mineral supplies.

Looking ahead, government strategies for lithium supply security will likely evolve to emphasise recycling, circular economy approaches, next-generation battery technologies, and the integration of artificial intelligence and automation in mining and processing. Long-term strategic planning that synchronises infrastructure, workforce development, and innovation with industry cycles will be critical for maintaining competitive, secure supply chains over decades.

Ultimately, the transformation of lithium supply chains represents a fundamental shift in how nations prioritise resource security amid the clean energy transition. Success will depend on navigating complex market and geopolitical factors while upholding environmental and social responsibility, ensuring resilient and diversified supply networks essential for the global energy future.

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Source: Noah Wire Services

More on this

https://discoveryalert.com.au/lithium-supply-chain-security-2025-support-strategies/ - Please view link - unable to able to access data
https://www.reuters.com/business/energy/us-proposes-nearly-1-billion-funds-critical-minerals-materials-2025-08-13/ - In August 2025, the U.S. administration proposed nearly $1 billion in funding to bolster domestic development of critical minerals essential for technologies like electric vehicle batteries and semiconductors. Spearheaded by the Department of Energy, the initiative aims to reduce U.S. reliance on foreign sources, particularly China, by investing in mining, processing, and manufacturing technologies within the nation. The Office of Manufacturing and Energy Supply Chains (MESC) will allocate up to $500 million for advancing battery manufacturing and recycling, with additional funds targeting rare earth element supply chains and refining materials for the semiconductor sector.
https://www.reuters.com/business/energy/us-takes-stake-another-company-this-one-operating-massive-lithium-mine-nevada-2025-10-15/ - In October 2025, the U.S. government acquired a 5% equity stake in Lithium Americas, a Vancouver-based company developing the significant Thacker Pass lithium project in Nevada. This joint venture with General Motors is seen as a key step in reducing U.S. reliance on China for lithium, a critical component in batteries for electric vehicles, smartphones, and renewable energy technology. The Department of Energy is also investing with a $435 million federal loan and deferring $182 million in loan payments for the first five years. Lithium Americas and the DOE have agreed in principle to proceed with the deal, backed by a $2.3 billion loan arrangement to support Thacker Pass, which could produce enough lithium carbonate to power 800,000 EVs annually.
https://www.reuters.com/business/energy/chinas-catl-suspends-operations-major-lithium-mine-seeks-new-license-2025-08-11/ - In August 2025, China's top battery maker CATL (Contemporary Amperex Technology) announced it had suspended production at a major lithium mine in Yichun, Jiangxi province, due to an expired operating license. The company is actively seeking to renew the license, aiming to resume operations swiftly. This development fueled an immediate surge in lithium carbonate futures, especially on the Guangzhou Futures Exchange where prices jumped 8%. Shares of lithium miners in both China and Australia also saw significant gains, with Liontown Resources rising nearly 25% and others like Tianqi Lithium and Pilbara Minerals increasing over 10%. The move is part of a broader crackdown by Chinese authorities on overcapacity, which has led to similar production halts, such as at Zangge Mining in Qinghai. The Yichun mine, capable of producing over 46,000 metric tons of lithium carbonate equivalent annually (around 3% of expected global output for 2025), is a key source of lithium, a critical component in electric vehicle batteries. Lithium prices, down nearly 90% from their 2022 peak due to a demand slowdown and oversupply, regained some ground with this announcement, indicating a potential tightening in future supply.
https://www.mckinsey.com/features/mckinsey-center-for-future-mobility/our-insights/the-hidden-trends-in-battery-supply-and-demand-a-regional-analysis - McKinsey's analysis highlights significant regional trends in the global battery supply chain, emphasizing China's dominant role. Chinese companies control 67% of global lithium-refining capacity, posing challenges for other regions aiming to localize battery cell production. Europe, for instance, is projected to face a lithium-ion battery undersupply of around 70 GWh in 2025, even if all announced projects convert to production. This underscores the need for strategic sourcing and capability development in upstream raw materials and cell components to enhance regional supply chain resilience.
https://www.reuters.com/business/energy/china-shuts-down-a-major-lithium-mine-triggering-a-surge-in-prices-2025-08-14/ - In August 2025, Contemporary Amperex Technology Co., Limited (CATL), the world’s largest battery manufacturer, announced the shutdown of a major lithium mine in Yichun, southeastern China, to renew an expired license. This mine is significant, supplying about 6% of global lithium output. The closure caused an 8% surge in lithium prices and boosted shares of international mining companies. Yichun's mines contribute a quarter of China's and 12% of global lithium supplies, supporting major battery and electric vehicle manufacturers including Tesla, Toyota, and BMW. Though China lacks the largest lithium reserves globally, it leads in lithium refining, controlling 60% of global capacity, and is deeply invested in mining, refining, and battery production infrastructure. Recent discoveries have boosted China's reserve ranking but raised concerns over environmental impact and potential oversupply. The lithium market, after booming in 2022, has faced volatility due to overcapacity and slowing demand for electric vehicles. Experts believe the mine’s closure may form part of Beijing’s strategy to curb industrial overcapacity, a response to intensified competition and declining profitability across China’s EV sector. Further production halts could send lithium prices even higher.
https://www.metal.com/en/newscontent/103476612 - Recent developments in China's lithium mining sector have highlighted the risks associated with the geographic concentration of lithium production. The suspension of operations at major lithium mines, such as the Jianxiawo mine in Yichun, Jiangxi province, due to expired operating licenses, has led to significant fluctuations in lithium prices and shares of mining companies. This situation underscores the vulnerabilities in the global lithium supply chain, emphasizing the need for diversification and strategic partnerships to mitigate potential disruptions.

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The draft above was created using the information available at the time the story first emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 8

Notes: The article was published on November 13, 2025, and references recent events up to August 2025, indicating high freshness. However, it contains repeated mentions of data recycling older material from October 2025, which suggests partial overlap. While updated data is included, the duplication should be flagged for recency issues.

Lithium supply chain
Renewable energy
Geopolitics