00:00Dan, why is China so keen then to develop its domestic resources that, of course, are so central to the EV sector?
00:10Yeah, you know, for a long time, Tom, China's economy has been based on importing natural resources from other parts of the world
00:16and then using those resources to produce, you know, manufactured commercial goods, consumer goods that it sells to the rest of the world.
00:23But, you know, in the past couple of years, with increased pressure from the U.S., it's starting to try to build a little bit more self-resiliency.
00:32And one of the places that you can see that really clearly is Yichun.
00:36It's this small, by China standards, small, several million people, town in Jiangxi province that's rich in a very low-grade ore for lithium.
00:47And, you know, now we were there a couple of weeks ago, and it's just trucks are rumbling down mountains filled with this ore every 30 seconds or so.
00:57You know, processing plants are doing their best to turn it into battery-grade material.
01:01And, you know, to try to make sure that China is increasing its production of this stuff and becoming, you know, less reliant on importers like Chile and Australia.
01:12Yeah, so it's part of that self-reliance story.
01:14So there's a lot of activity, there's a lot of demand, but you and the team found that actually many of these companies are not actually making any money.
01:22Yeah, a lot of these mines were started a couple of years ago when lithium prices were sky high.
01:28But they've fallen about 90% since 2021.
01:32And now, you know, this ore that Yichun is rich in, it's called lipidolite.
01:36It's very low-grade.
01:38It contains, like, you know, 1%, 2% of its mass is actually lithium.
01:43And so it requires a lot of expensive processing, heating, chemicals.
01:47And then, you know, it requires a lot of dealing with environmental waste, which is also very costly.
01:54And so it's incredibly expensive to process.
01:57But these companies are still doing it, in part because there's, you know, government pressure to keep jobs up,
02:03but in large part also because there's these long-term strategic concerns about making sure these resources are ready,
02:09if anything were to happen, that would block them from foreign sources.
02:12Dan, how is the local government balancing the need?
02:17And the pressure's there, isn't it, from the central government to ensure that there aren't too many
02:21or that the environmental impact of heavy industry is not overly significant.
02:26We know that is a bigger issue now for the authorities in Beijing.
02:29So how are the local provincial authorities squaring the need for this sustainable supply chain with an environmental cost?
02:35Yeah, you know, there's undoubtedly any, there's going to be an environmental cost anytime there's resource extraction.
02:43But several years ago when this boom first started happening, you know, there were reports of people dumping waste into rivers
02:51and, you know, high pollution levels in rivers that are, you know, used by locals to wash clothes, to, you know, water their gardens.
03:00This is a beautiful part of China with, you know, lush green mountains.
03:05You know, brilliant yellow fields of rapeseed flowers.
03:08And the government really wants to protect it.
03:10So, you know, what we saw were, you know, new developments of tailing ponds with, you know,
03:15thick vinyl coatings that wouldn't allow any water to leak into the local drink water supply.
03:20You know, those trucked roads coming down from the mountains, every 30 or 40 meters,
03:25they were little water sprayers to keep the ore moist so it wouldn't, you know, fly off and get into the local rivers and streams.
03:33So the government's definitely putting some effort into making sure that the river and the environment stays clean.
03:39But again, those efforts require costs for companies and it's costs that eat into already tight margins.
03:45So, let's do a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of
Be the first to comment