"Targeting Subsidy Benefits"... Global Auto Companies Fight to Secure Mineral Supply Chains

Volkswagen Invests in Nickel Mine Acquisition
GM Partners with Lithium Producer
Subsidy Policies Encouraging De-Chinaization
Securing Alternative Supply Chains in Third Countries

Global automakers are racing to secure mineral supply chains that can replace China in order to receive electric vehicle subsidies from the United States and the European Union (EU). Since the core of each country's subsidy policy is to exclude China from the mineral supply chain, their strategy is to reduce dependence on China through investments in mines in third countries.

Volkswagen, a German automobile manufacturer, electric vehicle ID.3 [Image source=Reuters Yonhap News]

On the 12th (local time), The Wall Street Journal (WSJ) reported that Volkswagen's battery subsidiary PowerCo and Stellantis each invested $100 million in the special purpose acquisition company (SPAC) ACG. ACG plans to establish a mineral company by acquiring nickel and copper mines in Brazil. The nickel produced there will be refined at Glencore's smelting plants in Western Europe and North America, and then used by each company to manufacture electric vehicle batteries.

General Motors (GM) and Ford have also joined the mineral investment trend. In January, GM invested $650 million in the emerging lithium producer Lithium Americas, becoming its largest shareholder. Lithium Americas, in partnership with GM, has launched the largest lithium mining project in the U.S., called 'Thacker Pass.' This project mines lithium in Humboldt County, Nevada, and if its feasibility is confirmed, it is expected to produce up to 80,000 tons of lithium annually. This amount is sufficient to cover all the lithium GM needs to produce more than 100 electric vehicles in North America by 2025.

Ford also invested $4.5 billion in March in a nickel processing facility in Indonesia to secure nickel, a key material for electric vehicle batteries. Ford expects to obtain the raw materials necessary to produce 2 million electric vehicles annually through this facility.

The automotive industry is intensifying efforts to secure mineral supply chains to qualify for subsidy benefits offered by various countries. Major countries such as the U.S. and the EU are competing in subsidies to exclude China from mineral supply chains and increase domestic investment in eco-friendly industries. Currently, 89% of global lithium produced by Australian companies is exported to China for processing. In the case of graphite, China accounts for 68% of global mining output.

The U.S. provides a $3,750 electric vehicle subsidy only to companies that use 40% of key minerals processed in countries with which the U.S. has free trade agreements (FTA), aiming to reduce mineral dependence on China. The EU is also finalizing detailed measures of the Critical Raw Materials Act (CRMA), which aims to reduce dependence on raw materials from third countries to less than 65% of total consumption.

WSJ explained, "The fact that automakers are investing in minerals one after another means they are in a desperate situation to secure raw materials outside China," adding, "They are seeking mines that meet the criteria for benefits to qualify for billions of dollars in electric vehicle tax credits, loans, and subsidies in the U.S., Canada, and Europe."

This content was produced with the assistance of AI translation services.