Security Dynamics And Governance Of China's Lithium Supply Chain

The trajectory of industrialized countries confirmed that the consumption of bulk minerals showed an"S"pattern with zero or negative growth after reaching its peak.This phenomenon is seeing in China based on the assumption that China's consumption of bulk minerals will continue to peak around 2025.Over the same period,as critical raw materials for strategic emerging industries and modern national defence construction,the demand for critical minerals,which used to be of low economic value and used in small quantities,is rising,and their strategic position is being deepened.The game in the field of critical minerals has become increasingly fierce among the world's major economies.Global supply and demand of critical minerals are tight,and price fluctuations are likely to continue for a long time.The existing global supply chain governance framework of minerals has obvious benefit imbalances.It is urgent to improve the supply chain governance of minerals to support national security.China has built a modern resource industry with the largest market as a leading global resource country,producer,and consumer of minerals.Xi Jinping,general secretary of the Communist Party of China Central Committee,proposed the need to adhere to a holistic view to national security in2014,to take advantage of the domestic demand-led and domestic recyclability of a large country,and to deal with the uncertainty and instability of the environment.The security issue of minerals under a holistic view of national security is not simply a matter of markets,trade,and prices.However,it involves a range of political,diplomatic,and global governance strategies.As a critical raw material for the new generation battery technology,lithium is widely used in the new energy vehicles industry.It is also an important raw material for the electronic manufacturing industry,the biomedical industry,the aviation equipment industry,and the emerging metal functional materials industry.Lithium is becoming the core of the resource game in countries or regions such as China,the United States,Japan,Australia,and the European Union.As a country dominated by imported lithium processing,China has formed a relatively extensive and complete layout of the lithium supply chain.It results that China has a high degree of dependence on external lithium.With the implementation of the early peaking of the transport sector and carbon neutrality goals,China's demand for lithium for the electric vehicles industry will further expand in the future,which is triggering concerns about the security of lithium.Firstly,the study focused on the global supply chain of minerals.Based on the existing research paradigms of minerals security evaluation theory,national resource governance theory and global value chain governance theory,the thesis held the opinion that the current international and domestic environment uncertainty and instability were rooted in the profound adjustment of productivity and production relations triggered by the new round of scientific and technological revolution and industrial change as well as the shrinking of the global value chain and industrial space agglomeration caused by the pandemic.Under a holistic view of national security,the new demands for minerals security were clarified into three goals.The first demand was that the deficit in resource demand became the key to affecting the cost of resources,and there was a need to give full play to the advantages of the super-large domestic market and to manage the risks arising from the coupling of the supply chain,the value chain and innovation chain.So the third demand was to improve the resilience of the minerals supply chain on the one hand and to realize a community with a shared future for humanity.Combined with the new demands for minerals security under a holistic view of national security and the attributes of lithium,which were concentrated and co-produced distribution,high technology,high speculation and high global value chain stickiness,the national lithium supply chain security evaluation framework was proposed,which reflected not only the fundamental role of lithium for strategic emerging industries and national economic development,but also the stability of global supply,and emphasized the synergy between domestic security and global resource governance.Then a framework for the governance of lithium supply chain security in China,which considered the synergy between national will and market forces,was constructed.Then,the study overviewed the status of resource distribution,production,consumption,and trade in the global whole supply chain of lithium comprehensively.Furthermore,the current position of China in the global lithium supply chain was clarified.China is the fourth largest country globally regarding economically recoverable lithium reserves,but lithium production is low.Relying on primary lithium imported from Chile and Australia,China has become the world's largest lithium intermediate and final product manufacturer and the world's largest consumer of lithium-containing products.China's current trade capacity in the global lithium trade is excellent and diversified,but its trade influence is insufficient.The current lithium reserves and resources in China were systematically analysed,and the timing of peak supply and annual production of lithium in China under different ultimate recoverable reserves(URR)scenarios were calculated using the Hubbert model.Based on historical mining rates,it was estimated that China's lithium production would peak between 2070 and 2090 and that domestic lithium production would be less different under different URR scenarios until 2050,with production expected to be around 1.4×10~4 tons of lithium content in 2030,increasing to around 4×10~4 tons by 2050.Then,based on a comprehensive review of current downstream applications and shares of lithium in China,the study analysed the future lithium demand for new energy vehicles development under different market share scenarios for electric vehicles.The results showed that the number of lithium consumed in new energy vehicles alone was expected to reach 2?5×10~4 tons by 2030 and grow to9?14×10~4 tons by 2050.The future demand for lithium in new energy vehicles alone would exceed the domestic lithium supply,making the lithium security situation critical.Thirdly,based on the lithium security evaluation framework under a holistic view of national security perspective,the indicators that affected the security of minerals were sorted out from the existing literature.Moreover,20 indicators from 7 dimensions formed China's lithium security evaluation index system,which had three sub-goals:global resource security,domestic resource economic security,and coexistence of resources.The evaluation of China's lithium supply chain security from 2010 to 2019 showed that the continuous improvement of the security of China's lithium supply chain was closely related to the changes in the coexistence sub-goal.Domestic resource economic security was a shortcoming that restricted the improvement of China's lithium supply chain security.Based on the new development pattern,China's lithium supply chain security optimization was to improve the security of the domestic supply chain.Based on the judgment of the future domestic supply-side and demand-side of China's lithium,this research focused on the long-term security situation of the domestic lithium supply chain under the scenario of supply-side resource constraints and electric vehicle development-boosting demand growth for China's lithium.The study then simulated the impact of the short-term shock caused by the Coronavirus on domestic lithium supply chain security.Scenario analysis resulted that China's lithium supply chain has prominent consumption-driven characteristics.In the long term,changes in China's ultimate recoverable lithium reserves would not significantly impact the lithium supply chain security.In contrast,the development of the electric vehicle industry would make China's lithium demand increase significantly,which will affect the security of China's lithium supply chain in the future.The domestic lithium supply chain was resilient to the short-term impact of the pandemic,but the problem of overcapacity was intensified.Finally,the dissertation reviewed critical minerals governance practices of the resource countries represented by the United States and Australia and the resource import-dependent countries represented by the European Union and Japan.Then scenario analysis method was used to simulate the combined policies from production improvement,recycling,and material substitution on lithium supply chain security in China.,the study put forward China's lithium supply chain security governance recommendations under the framework of the lithium supply chain security governance.That was from the perspective of improving the supply chain's resilience at home and improving the resource governance capabilities of the world.The marginal contributions of the dissertation are as below.Starting from the existing minerals security evaluation theory,national resources governance theory,and global value chain governance theory,the study proposed China's lithium supply chain security not only emphasized the supporting role of lithium for the national economy development but also considered the stability of global supply,as well as the synergy between domestic security and global lithium governance.From the perspective of the entire supply chain,the lithium security governance framework considers the coordination of the will of sovereign states and the responsibilities of major powers required to improve the resilience of the domestic supply chain and achieve the inclusiveness of the global governance of lithium.The lithium supply potential of China was predicted from the characteristics and historical production of lithium in China using the Hubbert model.Taking the development of electric vehicles to promote the growth of lithium demand as the essential judgment of China's lithium demand in the future,the study used the market mechanism to predict the future lithium demand in China.The supply chain system dynamics model and scenario analysis were employed to simulate the future dynamics of China's lithium supply chain under the pressure of insufficient supply and surge in demand and the short-term impact caused by the Coronavirus.Then the security governance countermeasures for China's lithium that meet the development needs of strategic emerging industries was proposed.