reeltub97 t1_iujr6cw wrote on October 31, 2022 at 9:17 PM

Reply to comment by DoomsdayLullaby in Indonesia eyes OPEC-style cartel for battery metals by bjohn876

That's true, but the largest producers include Canada and Australia. I know China holds the bulk of production but rare earth metal mining isn't something that can only be done in certain places. Even getting a major portion of the market share seems unlikely when the top 10 producers are scattered on every continent. Half of the worlds lithium is from Australia and the other half is from South America. Forming a cartel on lithium without either is a waste of time

https://www.mining.com/web/ranked-top-25-nations-producing-battery-metals-for-the-ev-supply-chain/

This is from 2020 so I'm not sure how much the market has changed from this diagram.

DoomsdayLullaby t1_iujuxxe wrote on October 31, 2022 at 9:45 PM

And the largest producer of oil is the US. Several major players in the fossil fuel industry are not in OPEC. You don't need the entire market to create a cartel, you just need a significant portion.

>I know China holds the bulk of production but rare earth metal mining isn't something that can only be done in certain places.

It is from an economical sense, especially when trying to bring battery production to a scale that could facilitate the current global economy in replacing internal combustion engines and the energy storage capacity fossil fuels represent from its current scale which is orders of magnitude smaller.

reeltub97 t1_iujxidt wrote on October 31, 2022 at 10:04 PM

The United States is the largest producer but not the largest exporter because oil is produced primarily for domestic refinement and consumption. The same thing is not true for lithium unless Australia and Chile are also the largest producers of lithium ion batteries, which they are not. Forming a cartel does require at least a significant portion of market control, you're right, but in a practical sense it's more complicated to make that a political reality. It doesn't matter if a cartel does control 58% of exports if a country that controls 42% of exports can undercut them, it's a waste of time when buyers can take their money elsewhere. OPEC is the exception not the rule and it doesn't seem obvious that the economic or political conditions that made forming OPEC are even possible in the lithium market.

DoomsdayLullaby t1_iujyvtl wrote on October 31, 2022 at 10:15 PM

>The United States is the largest producer but not the largest exporter because oil is produced primarily for domestic refinement and consumption.

That hasn't been true for the past decade since the shale oil boom. It's one of the largest exporters of oil and the largest exporter of refined oil products.

Battery production encompasses several key minerals, not just lithium.

>It doesn't matter if a cartel does control 58% of exports if a country that controls 42% of exports can undercut them

It does, and especially does when the needed capacity is several orders of magnitude higher than current production levels.

>OPEC is the exception not the rule and it doesn't seem obvious that the economic or political conditions that made forming OPEC are even possible in the lithium market.

Seems like quite the assertion based on little more than intuition.

reeltub97 t1_iuk0gio wrote on October 31, 2022 at 10:27 PM

Rare earth metals and oil production are not equivalents. Lithium is not the only metal for batteries, but it's necessary for lithium ion batteries which is where rising demand for batteries is coming from. The fact that multiple metals are needed for battery production only supports the fact that forming a global cartel to coordinate the production of each is impractical. OPEC can influence oil prices because it can manage production of a single resource it holds in large quantities. How would abattery metal OPEC equivalent coordinate that? It's a safe intuition to rest on that forming global cartels is the exception not the rule when they are relatively rare in mineral exports. The only similarities between oil and battery metal production seems to be that both come from the ground. I would think it's safe to assume that the economic and political wrangling of enough countries that produce meaningful proportions of battery metals is not something that is likely to succeed. After all, the belief that "all it takes is a significant portion of the market" ignores that global cartels actually aren't very common.