CATL says mining is now the battery supply bottleneck

“Processing is not the bottleneck, but mining is,” Jiang Li said. (Qilai Shen/Bloomberg)

Securing supplies of key raw materials has become a priority for the world’s largest manufacturer of electric vehicle batteries.

“Processing is not the bottleneck, but mining is,” Jiang Li, vice president of Contemporary Amperex Technology Co., said in a recent interview. “We want to build our cost advantage with our upstream capabilities.”

China has a stranglehold on refining battery minerals, and customers such as Ford Motor Co. have warned in the past that processing is a bigger constraint on the industry than mining.

But surging prices and supply uncertainties are now pushing some battery makers to focus investments on extracting minerals. For all of its manufacturing heft, China still relies on imports of ores. To counter that, CATL plans to establish a mining unit and has tapped Chen Jinghe, the founder of China’s biggest metals miner, as an adviser.

“Technology innovation can help us conquer shortages of metals in the medium to long term. But sometimes we don’t have enough time,” Li said. “The market can change rapidly. We have to face that difficulty, so mining is very important.”

CATL’s current roster of mining investments includes domestic and overseas projects covering lithium, phosphate and cobalt. Its big lithium mine in China’s Jiangxi province, however, has seen disruptions since August.

That has contributed to lithium’s wild price swings. CATL is making advances in batteries that instead use sodium — a globally abundant element — which the company has dubbed an alternative risk management strategy.

“If the price of lithium goes up, then we can make more sodium-ion batteries,” said Li.

On the wire

China Mineral Resources Group Co., the state-backed buyer seeking greater pricing power in some key metals, has told steel mills and traders that it plans to restrict some Fortescue Ltd. iron ore inventories held at Chinese ports. Iron ore advanced, with futures briefly topping $100 a ton.

China’s steel surplus is set to contract this year as production decreases more than demand, Bloomberg Intelligence said. The industry will continue its structural transition in the second half as the economy shifts to high-value manufacturing and green technology from property construction.

The volatility in oil prices may become less consequential for China as it reduces its dependence on petroleum, according to Gavekal Dragonomics. A key driver of that shift is the rapid electrification of the country’s heavy-truck fleet.