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2 China and Lithium Introduction In China, companies engaged in the lithium mining and battery sectors are lavishly on research and development, both locally and abroad. Salt lakes punctuate Tibet's vast geography, and some of these lakes contain some of the world's most significant lithium resources. Some Chinese companies have established operations in Tibet to access the lucrative market for lithium batteries in the region. However, Tibetans, who have first-hand knowledge of the environmental implications of lithium mining, are highly opposed to this method, which has received backing from the Chinese government. The paper will focus on the main motivations of Chinese companies to invest in Australian lithium resources, one lithium mine project in Australia that has received investment from China together with its challenges and opportunities. Lastly, the paper will highlight some recommendations to the Chinese company to move the project forward. What are the main motivations of Chinese companies to invest in Australian lithium resources? Australia must first recognize the possibilities presented by the lithium-ion battery era to take advantage of the enormous potential presented by this technology. In addition to possessing some of the third world's major lithium deposits and the major manufacturer of hard-rock lithium spodumene (the Greenbushes project in Western Australia is the world's largest lithium spodumene asset), Australia is also the world's leading lithium producer, according to the International Energy Agency (Sux et al., 2018). Australia currently produces nine of the ten mineral elements required to produce the vast majority of lithium-ion battery anodes and cathodes. It also possesses economically viable quantities of graphite, which is the tenth mineral

3 element required to produce the final element in the battery manufacturing process. Other than that, Australians have easy access to all of the chemicals required to create lithium-ion batteries, giving them a competitive edge over other nations. Along with abundant natural resources, Australia has competitive supply-chain advantages that make it a popular location for business travelers. International markets are reached by infrastructure in Australia's rail and port networks, which link the country's mineral-producing regions (Staff, 2005). This strategy encourages the development of a production capacity capable of supplying refined and raw resources to worldwide markets and developing effective local manufacturing and processing capability capable of producing finished goods for international markets. Furthermore, Australia has world-class proficiency in various disciplines, such as and renewable energy research and development, high-tech engineering, resource processing and extraction. For foreign investors, Australia is a highly attractive area to invest in the potential of the new economy. Australia has good advantages across the entire range of risk, capital-allocation, and technical concerns including regulatory assurance, legal and regulatory predictability, environmental and labor standards, training and development, technology, as well as economic and political stability. Choose one lithium mine project in Australia that has received investment from China. What are the main challenges and opportunities for the Chinese company in this investment from the industry-based, resource-based, and institution-based views? Great Wall Motor Co. Ltd acquired Pilbara Minerals Limited. Pilbara Minerals Limited is a firm based in Western Australia that produces silver, gold, and copper. It is a key player in the global metals industry. Mineral search, development, and extraction are only a few of the activities

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4 carried out by the company's employees. There is a lithium-tantalite deposit in Western Australia's Pilbara region that is owned by the company. The project is located in that area and is known as the Pilgangoora Lithium-Tantalite Project. Great Wall Motor Co., Ltd. is China's largest SUV manufacturer, and its H-shares and A-shares were the first to be offered on the Shanghai Stock Exchange in 2003 and 2011, respectively. Great Wall Motor Co., Ltd. is headquartered in Shanghai. In addition to four production bases for complete cars, it also has various capabilities for supporting basic components such as engines, gearboxes, and other subassemblies (Li et al., 2018). The company's mission is to conduct successful research and development while pursuing industry leadership and building a solid foundation for future independent innovation. Its research and development equipment and system are of world-class quality. It is capable of designing and manufacturing SUVs, automobiles, pickup trucks, and powertrains and creating more than ten new automotive models at the same time, all at the same time. A total of 76 typical test roads spanning ten modules have been built by Great Wall Motor, making it the biggest and most complete car testing ground in China. The test ground contains high-speed racing circuits, city squares, mountain roads, and other features. There has been a total investment of one billion yuan on the testing ground, which comprises the biggest and most complete vehicle test ground in all of mainland China. To acquire a 3.5 percent stake in Pilbara Minerals, Great Wall Motor, China's leading SUV maker, will emolument $22 million in cash and stock in return for the stake. In resource based view, according to the terms of the contract, Great Wall will acquire 75,000 metric tons of lithium carbonate annually for use in lithium-ion batteries over the following five years, a total of $1 billion ( Richardson & Dart 2020 ). Pilbara aims to utilize the $22 million in financing to finalize the development of its Pilgangoora Lithium-Tantalum Project, which is presently under

5 construction in Western Australia. It is envisaged that the additional $39 million will be utilized to aid in financing the creation of a phase 2 enlargement at the facility. Lithium hydroxide and Lithium carbonate are in high demand worldwide due to the growing fame of electric vehicles driven by lithium-ion batteries, which are becoming more common. The electric car manufacturer, based in the United States, is raising manufacture at its Gigafactory battery complex in Nevada. Because it is co-owned by Panasonic, it is the world's prevalent lithium-ion battery manufacturing plant. By the end of 2018, the Chinese government had ordered that manufacturers produce ten percent of their sales income from electric and hybrid cars (Tan, 2022). The prices of major lithium chemical creators SQM and Albemarle surged by over fifty percent in the previous year. Numerous other businesses, such as Pilbara, showed an interest in joining the market. Pilbara owns and operates the Pilgangoora Lithium-Tantalum project in Western Australia. The project is situated south of Port Hedland and is expected to begin production in the first half of 2018. Pilbara has a total investment of $1 billion. As a result of the arrangement, Great Wall will be able to secure supplies of a critical mineral utilized in the development of electric vehicles. China hopes to set ambitious goals for electric and plug-in hybrid vehicles to combat pollution and overcome a competitive imbalance with global competitors. In industry based view, the country hopes that by 2025, electric and plug-in hybrid vehicles will account for at least a fifth of total Chinese automobile sales. Additionally, a key opportunity of the arrangement will be Pilbara's Pilgangoora Lithium-Tantalum Project, located in Western Australia, which will serve as the cornerstone for Stage 2 expansion. Following the allocation, after the deal is completed, Great Wall will own about 3.47 percent of the existing issued shares in Pilbara via indirect ownership (Staff, 2017). According to the transaction's terms, the deal represents the first time an automobile manufacturer has made a

6 direct investment in an upstream supplier of lithium-based raw materials in Australia. Because Pilbara has provided the company with US$50 million in debt financing for the company's Stage 2 expansion, Great Wall has the opportunity to obtain an additional 75,000 tonnes per annum (TPA) of Stage 2 offtake, for a total volume of 150,000 tonnes per annum, bringing the company's total offtake to 150,000 tonnes per annum. In According to current estimates, Pilbara's estimated total production of chemical grade spodumene concentrate is expected to exceed 800,000 tpa after completing the Stage 2 extension project. One of the most significant disadvantages of brine-lake lithium is its quality issue, which necessitates further processing to obtain the grade needed by battery makers, which is expensive (Tahil, 2007). In industry based view, this disadvantage is that hard-rock lithium miners in Western Australia have termed "brine's dirty little secret." What are your recommendations to the Chinese company to move the project forward? Lithium's Function in the Body Pilbara Minerals has secured a deal with Chinese automotive heavyweight Great Wall Motors, making it the first company in the sector to sign an offtake agreement directly with an electric car manufacturer, marking an important milestone for the industry (Staff, 2017). It was announced late on Thursday night that Pilbara would supply Great Wall with up to 150,000 tonnes of spodumene concentrate per year from Pilbara's Pilgangoora lithium mine, which will be used in the car manufacturer's electric and hybrid vehicles. The agreement was signed late on Thursday night. Pilbara Minerals has lowered the volume of its mining and processing operations to battle slow customer demand for lithium raw materials while the Chinese market remains down (Tabelin etc al., 2021). According to the company, to match production with decreasing customer demand

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7 demands, existing stockpiles at the Pilgangoora lithium-tantalum mine in Western Australia should be drained. In conclusion, efforts to secure battery metal supplies and improve production capacity for lithium-ion batteries are part of the country's effort to meet the rising demand for lithium-ion batteries over the next decade, which is predicted to climb significantly as the global economy develops. It is a vital component of the batteries that power numerous consumer devices that people worldwide rely on. These items include computer monitors, digital cameras, and smartphone batteries.

8 References Li, Y., Zhang, Q., Liu, B., McLellan, B., Gao, Y., & Tang, Y. (2018). Substitution effect of new- energy vehicle credit program and corporate average fuel consumption regulation for green-car subsidy. Energy , 152 , 223-236. Sun, X., Hao, H., Zhao, F., & Liu, Z. (2018). Global lithium flow 1994–2015: implications for improving resource efficiency and security. Environmental science & technology , 52 (5), 2827-2834. Staff, B. (2005). THE MINERAL INDUSTRY OF AUSTRALIA. Minerals Yearbook , 3 , 159. Tabelin, C. B., Dallas, J., Casanova, S., Pelech, T., Bournival, G., Saydam, S., & Canbulat, I. (2021). Towards a low-carbon society: A review of lithium resource availability, challenges and innovations in mining, extraction and recycling, and future perspectives. Minerals Engineering , 163 , 106743. Tahil, W. (2007). The trouble with lithium. Implications of Future PHEV Production for Lithium Demand. Martainville: Meridian International Research . Tan, H. (2022, January 12). China and lithium: Time to retire the narrative of resource nationalism . South China Morning Post. https://www.scmp.com/comment/opinion/article/3162941/china-and-lithium-why- its-time-retire-narrative-resource?module=opinion&pgtype=homepageo Richardson, N. & Dart, J. (2020, July 30) . Pilbara minerals hopeful of lithium market turnaround, secures new financing . S&P Global. https://www.spglobal.com/commodity- insights/zh/market-insights/latest-news/metals/073020-pilbara-minerals-hopeful-of- lithium-market-turnaround-secures-new-financing

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