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Japan And China Fight It Out For Right To Mine Lithium Under Bond's Battlefield

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http://business.timesonline.co.uk/tol/busi...icle6498591.ece

The desolate, sun-baked deserts of southwestern Bolivia are poised to become the energy battleground of the 21st century, with China and Japan staking early and aggressive claims in the great lithium land-grab.

Japan, observers say, may have won the first round, but, with its mainstream resource ambitions thwarted on the Rio Tinto deal, China could redouble its efforts to gain a foothold in the salt flats of South America and the all-important technology metals.

The flurry of ruthlessly competitive diplomatic and corporate overtures to Bolivia from both Tokyo and Beijing is driven by the same dream: ultimate control of the future global market for electric vehicles. An ample supply of lithium, at least using current technology, is the critical weapon in that quest and Bolivia is to lithium what Saudi Arabia is to oil, say geologists.

Masao Kando, director-general of the metals strategy department of the Japanese Government, told The Times: “We all know that China is becoming the world's biggest car producer and we see them as our biggest rival. Looking at the Rio Tinto case, we see that China is moving to secure resources by throwing incredibly abundant capital at the effort and it is sometimes hard to compete with that.â€

At present, Chile is the world's biggest annual producer of lithium, but half the planet's known reserves of the metal are thought to lie under the Salar De Uyuni in Bolivia. The right relationship with La Paz will hold the key to everything, according to senior Japanese officials.

For the two rival Asian economic giants, control of lithium supplies - or at least a firm guarantee of stable future flows - is vital. For Japan, whose export-led economy is dominated by the lithium-hungry auto and electronics industries, it is a fight for survival of the status quo. With reliable long-term sources of lithium, Japanese companies can continue producing batteries for the world's laptops, digital cameras and mobile phones. With the same guarantee, Japanese car companies will be able to convert their manufacturing prowess to mass production of electric vehicles.

Yet for China the motivation for lithium dominance is even more compelling: the United States, Germany and Japan led the world in the development of petrol-driven cars in the 20th century and it would take many years for Chinese carmakers to match that expertise. Electric vehicles, on the other hand, represent a blank slate: these are pioneering days in the post-combustion engine era and a potentially huge opportunity for China to lunge for early leadership, increasingly nervous Japanese automaker executives believe.

Japan's latest gambit in the rush for Bolivia's lithium resources involved a delegation of corporate and government figures, including executives from Sumitomo and Mitsubishi, and what is understood to have been a promise that Japanese mining technology would be shared with their Bolivian counterparts. While the reserves under Salar de Uyuni, where Quantum of Solace, the most recent Bond film, was shot, are thought to be vast, they are not as readily extractable as sources elsewhere. Japan's expertise is thought to be the solution.

China, whose lands hold about a tenth of the estimated global reserves of lithium, is the world's third-largest producer and several of its companies have rapidly grown to become substantial global players in lithium battery production. Beijing's efforts to butter-up the authorities in La Paz have included a donation of cash to help to build a school in the town where President Morales was born and a gift of about 50 military vehicles, including two ships.

I know Peak Lithium has been mentioned before.

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