The latest call to strengthen the supply of key mineral resources will support China's booming new energy vehicle sector, but battery innovation is still needed when it comes to reducing reliance on foreign resources, said industry experts on Monday.
The comments were made after Xin Guobin, vice-minister of industry and information technology, told a recent conference that the cost of NEVs remains high while their safety, reliability and convenience need further improvement.
The ministry will speed up collaboration with other government departments to improve the supply guarantee system for key resources needed for NEVs, including lithium, cobalt and nickel, Xin said.
"The minister's remarks show that China is working to help domestic enterprises withstand fluctuations in the raw materials market for NEVs. Only through the collective power of government and companies can the domestic industry counter periodic pressure," said Cui Dongshu, secretary-general of the China Passenger Car Association.
Roy Lu Yan, head of industrial research at battery giant, Gotion High-Tech, rebutted market rumors that the remarks sent the signal that China will centralize the purchase of key mineral resources for NEVs.
"Some domestic raw material suppliers for NEVs are indeed suppressing supplies. The call from authorities demonstrated the nation's determination to curb this kind of behavior and ensure the security of NEV supplies in the long term," he said.
Since the beginning of this year, the price of battery metals has risen sharply worldwide. Australian lithium and tantalum producer, Pilbara Minerals, stunned the market last week when it announced that it had secured an offer of $2,240 per metric ton for a parcel of lithium-rich spodumene crystal.
"It is not only China but also countries worldwide that are scrambling to build bigger reserves of core raw materials, which are key to lowering the high cost of NEVs. To persuade consumers to replace traditional gasoline-fueled cars with NEVs, the latter must be cost-effective," Cui said.
"The high cost of NEVs presents a major bottleneck for any country aiming to achieve faster development in the sector. Acquisitions and investment is one of the ways for domestic companies to effectively guarantee supply," he added.
Bloomberg reported that Chinese firms competed recently to secure key elements needed for NEV batteries. Battery giant, Contemporary Amperex Technology, is reported to be the mystery suitor behind an astonishing $298 million offer for Vancouver-based Millennial. Millennial's assets also attracted interest from the China Molybdenum Co. The company is reported to be considering joining CATL in the bid, the report said.
According to the China Nonferrous Metals Industry Association, nearly 60 percent of the country's spodumene crystal has to be imported from abroad to produce lithium salts used in the manufacture of NEV batteries.
"Chinese companies should vigorously develop resource-friendly technological innovations like cobalt-free batteries and forefront battery recycling, to reduce their extreme dependence on such resources," said Lu.