‘Battery arms race’: how China has monopolised the electric vehicle industry

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Chinese companies dominate mining, battery and manufacturing sectors, and amid human rights concerns, Europe and the US are struggling to keep pace

Think of an electric car and the first name that comes to mind will probably be Tesla. The California company makes the world’s bestselling electric car and was recently valued at $1tn. But behind this US success story is a tale of China’s manufacturing might.

Tesla’s factory in Shanghai now produces more cars than its plant in California. Some of the batteries that drive them are Chinese-made and the minerals that power the batteries are largely refined and mined by Chinese companies.

As the world transitions to electric vehicles (EVs), companies are racing to secure and strengthen their positions in the battery supply chain, from mineral extraction and processing to battery and EV manufacturing.

The sector has seen a move towards vertical integration – where one company controls a number of steps along the supply chain – to guarantee supply and, in some cases, to improve transparency.

And in what has been dubbed, the “battery arms race”, China is in pole position.

China is the world’s biggest market for EVs with total sales of 1.3m vehicles last year, more than 40% of sales worldwide. Chinese battery-maker CATL controls about 30% of the world’s EV battery market. And cobalt specialist suppliers Darton Commodities estimate that Chinese refineries supplied 85% of the world’s battery-ready cobalt last year; a mineral that helps to improve the stability of lithium-ion batteries.

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Most of that cobalt comes from the Democratic Republic of the Congo (DRC), where almost 70% of the mining sector is dominated by Chinese companies.

Drive through DRC’s southern copper and cobalt mining belt, and signs in Chinese are everywhere: at the entrance to casinos and hotels and on trucks and business premises.

In August, China Molybdenum Company (CMOC), a giant Chinese mining firm, announced an investment of $2.5bn (£1.8bn) to double copper and cobalt production at its Tenke Fungurume Mine, already one of the largest in DRC. That followed its purchase of a 95% stake in nearby Kisanfu copper and cobalt mine for $550m.

Fellow Chinese corporate giant, Huayou Cobalt owns or has a stake in at least three copper-cobalt mines in DRC and is a key player at every step of the cobalt supply chain, from mines to refineries to battery precursor and cathode production.

But China’s dominance of DRC’s copper-cobalt mines comes at a price, according to claims by Congolese workers employed at them.

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“The Chinese treat Congolese very badly. They like to insult us. They like to raise their voices. Even for a small fault, you’re punished. The Chinese are there as the boss to control Congolese,” says a worker employed at Sicomines, a mine majority-owned by a Chinese consortium, which includes Huayou Cobalt.

Workers at Sicomines claim they are paid less than Chinese workers who do the same jobs, and are subjected to degrading treatment by Chinese supervisors.

In Europe too, companies are beginning to gain on China’s lead. By the end of the decade, the continent is expected to have 28 factories producing lithium-ion cells, with production capacity due to increase by 1440% from 2020 levels, according to Darton Commodities. That growth is being driven by companies such as Britishvolt in Northumberland and Sweden’s Northvolt, as well as Asian firms expanding production into Europ.

However, European investment in mining and the production of battery precursor and cathode materials is not keeping pace, says Andries Gerbens at Darton. “China will eventually become less dominant. Nonetheless, it will remain a big player,” he says.

The US, however, lags behind, despite a $174bn investment “to win the EV market”, announced as part of President Joe Biden’s $2tn infrastructure package in April, although this has since been slimmed down.

Simon Moores, CEO of Benchmark Mineral Intelligence told a US Senate committee in June that China is building the equivalent of one battery megafactory a week compared with one every four months in the US.

He warned: “A new global lithium-ion economy is being created, yet any ambitions for the United States to be a leader … continue to only creep forward and be outstripped by China and Europe.”

A spokesperson for CMOC in DRC says, “We are devoted to providing a safe, healthy, and decent work environment to all employees and attach great importance to protecting the rights of employees.” The spokesperson says the company is committed to observing international labour conventions and local labour laws, adding that all DRC national employees are members of trade unions.

Sicomines itself did not respond to multiple requests for comment. However, in a statement Huayou Cobalt says, “Sicomines, as a responsible company, strictly abides by DRC laws and regulations and respects human rights and fulfils best labour practice.”

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