China is a key partner to the west, but also a fierce rival, as the west looks to mine and refine the metals needed to transition to a net zero economy, mining executives told delegates at the FT Mining Summit in London last week.
The heads of global mining firms warned that China controls key critical materials and is willing to exert a "strong influence" over these markets, while recognising that the country's expertise in mining and refining will be needed to build out western supply chains.
"You have to have a degree of pragmatism," according to Michael Nousa, chief executive of Igo, which owns multiple Australian nickel and lithium mines, including joint lithium venture Greenbushes with Chinese mining company Tianqi Lithium. "It's been very clear that China wants to continue to exert a very strong influence on the anode part of the supply chain. Ultimately, the transition cannot occur without China."
Chinese expertise is needed in Australian mines, and particularly in refining operations, if Australian companies are going to extract the most value out of their resources, he said.
"Australia is treading a more careful path, more than Canada, which has been specific on Chinese investment," Nousa said. There is disagreement among western countries about how to approach Chinese capital, with countries such as Canada and the US taking a more protectionist approach and Australia, the EU and the UK being more tolerant of Chinese investors because of either proximity or historical business links.
Head start
Speakers praised China's early approach to energy transition metals, which they identified as key to the strategy.
"We are blaming China right now, but they had a long-term view that we didn't have 15-20 years ago," Eramet chief executive Christel Bories said. "They invested massively in mines outside of their territory because they saw that critical minerals were key to the energy transition."
Alex Pickard, senior-vice president of Canada's Ivanhoe Mines, which partnered with Chinese outfit Zijin Mining Group to develop the Kamoa-Kakula copper mine, said China was a key partner in the development of this project, allowing them to scale up at an accelerated pace.
"The Chinese have been fantastic to us at Ivanhoe. Without them, we wouldn't have been able to build one of the world's biggest copper mines in the Democratic Republic of the Congo within 4-5 years," he said, adding that China has been "the most efficient allocators of capital to the mining sector for the past 15-20 years".
Increasing protectionism by the US and EU now are playing catch-up, speakers said, although it may be a case of 'too little, too late'.
Refining reliance
Even if western mining companies are able to catch up in terms of resource extraction, supply chains still will rely on mid-stream refining operations in China.
"When you look at the whole supply chain for graphite, 65pc of mined supply comes from China and 100pc of processed spherical graphite comes from China today," Shaun Verner, chief executive of Australian graphite mining company Syrah Resources, said. China has shown that it wants to exert a "strong influence" on the anode supply chain, which accounts for a large part of the weight of an electric vehicle (EV) battery, he said.
Natural graphite demand is forecast to rise to 3.92mn t in 2033, from 1.22mn t this year, under Argus figures. And Chinese overseas lithium and nickel investments are critical to supplying the world with sufficient amounts of the battery materials it needs for its transition to EVs, speakers said.
"There is no risk of a nickel shortage, but the main source is in Indonesia, at about 50pc of the world," Bories said. "Most is processed by Chinese companies. Ninety per cent of Indonesian projects are Chinese projects. They can be friendly to the western world or not, depending on the geopolitical situation."
