A Global Lithium System Under Strain: Strategic Dependencies, Opaque Contracts, and Control Contradictions
[BLUF] According to available documents, the global lithium refining landscape is characterized by production expansion in Europe, Australia, and Chile, but off-take contracts remain fragmented and unpublished, while technological dependence on China has solidified through acquisitions, licenses, and regulatory conditions. In Europe, announced volumes exceed declared production capacities without public explanations. In Australia and Chile, strategic projects are managed by Chinese companies with technology controlled by foreign entities, despite statements of independence. The Chinese control over the supply chain appears systematic, but the methods of technology transfer are not transparent.
Part I: Europe – Promises Without Substance
European refineries are entering production, but off-take contracts with automakers have not been publicly disclosed consistently. Vulcan Energy has signed an agreement with Stellantis for 81,000–99,000 tons of lithium hydroxide over 5 years, a volume exceeding 300% of the refinery’s annual capacity of 24,000 tons. No explanation has been provided as to how this target is compatible with actual production. Another agreement with Glencore covers 36,000 to 44,000 tons over 8 years, but it is unclear whether this is the only one or if others exist that have not been disclosed. The refineries of AMG Lithium, Mangrove Lithium, and NESI-Vulcan are scheduled to begin production in 2026, but no specific off-take agreements with automakers have been announced. Transparency regarding off-take contracts is lacking, and announced volumes often exceed declared capacities without any explanation.
Part II: Chile – Withdrawals Without Explanation, Control Without Production
The withdrawal of BYD and Tsingshan from lithium production projects in Chile has created a strategic void. The projects, with a combined investment of $523 million and an estimated production capacity of over 50,000 tons/year, were canceled in 2025. It is unclear whether the contracts with SQM were terminated or merely suspended. The Chilean government has stated its intention to reduce external dependence, but has not presented a concrete plan for lithium refining. The Codelco-SQM joint venture, launched in December 2025, has secured state control over the Salar de Atacama until 2060, but it has not been specified whether the previously planned production capacity from the canceled projects has been replaced. State control does not automatically imply active production, and the lost capacity does not appear to be covered by new announced projects.
Part III: Australia – Declared Independence, De Facto Chinese Control
The Kwinana Lithium Hydroxide Refinery, the first lithium hydroxide refinery in Australia, is managed by a joint venture between Tianqi Lithium (China) and IGO (Australia), with Tianqi holding 51% and decision-making control over financing. The project has obtained a production license valid until 2046, but recorded a negative net profit of $28.7 million in the June 2025 quarter and has experienced mechanical problems since 2021. The Australian government signed a strategic agreement with the United States in 2025 for the security of the supply chain of critical minerals, but does not mention specific lithium refining projects. Other projects, such as those of Pilbara Minerals and MinRes, involve Chinese companies and technologies developed in China, but it is not clear who owns the operational technology. Lithium refining in Australia appears to be a system where technological dependence on China is maintained despite statements of independence.
Part IV: Chile – Declared Autonomy, Conditioned Dependence
The Chilean government has announced a national strategy for state control of lithium production, but has not provided a concrete plan to develop independent refining technologies. The Codelco-SQM joint venture, approved by the Chinese State Administration for Market Regulation (SAMR) on November 10, 2025, was conditioned on guaranteeing a minimum volume of 300,000 tons of lithium carbonate per year for Chinese customers. The Chilean government has not disclosed whether the lithium carbonate imported from China by Codelco is part of an integrated system that could imply long-term technical dependence. Chilean exports of lithium carbonate to China represent between 45% and 70% of the total between 2021 and 2024, with a significant increase compared to 24.8% in 2013. Despite official statements of strategic autonomy, the Chilean government has not presented a concrete plan for lithium refining.
Part V: Systematic Chinese Control, Zero Transparency
Tianqi Lithium holds 23.77% of the shares in SQM in Chile and 51% of the Greenbushes mine in Australia, positioning itself as a central player in the global raw lithium production. The Atacama deposit contains 1.7 billion tons of lithium in terms of carbonate equivalent (LCE), while Greenbushes holds 2.1 billion tons of LCE. According to official Chinese statements, at least 60% of non-Chinese refining capacity depends on technologies developed in China. The Chinese Ministry of Commerce updated the catalog of technologies prohibited for export in 2025, including processes for extracting lithium from brine, producing lithium carbonate and hydroxide, as well as technologies for purifying solutions and liquids containing lithium. Tianqi Lithium’s net profit in 2025 was 463 million yuan, an increase of 105.85% compared to 2024. 40% of the profit was attributed to revenue from SQM, despite the company announcing the sale of 1.25% of SQM shares by February 2026. The methods of technology transfer have not been made public.
Lithium Offtake Agreements for European Lithium: A Fragmented and Opaque Landscape
The European automotive industry is building a network of lithium refineries outside of China, but the off-take agreements that guarantee their sustainability remain partially obscure. While automakers declare strategic commitments, the quantitative and temporal details are often fragmented or unpublished.
Stellantis: An Ended Agreement, Ongoing Investments
Stellantis signed a pre-purchase agreement with Novonix (Australia) for 86,250 minimum tons and 115,000 target tons of synthetic graphite, lasting from 2026 to 2031. However, the agreement ended in 2025, without the company providing an explanation. The original contract provided for the supply of graphite for batteries, but it is not clear whether it referred to a specific refinery or a project under development.
Parallelly, Stellantis has invested over $100 million in Controlled Thermal Resources (CTR) in the United States to increase the production capacity of lithium hydroxide monohydrate from 25,000 to 65,000 tons/year. The investment was announced as part of a plan to ensure stable supplies, but it was not disclosed whether this capacity was covered by a specific off-take agreement.
Another significant commitment is the $52 million investment in Vulcan Energy Resources to expand the production of lithium hydroxide. The agreement involves receiving battery-grade products for electric vehicles, but it is not specified whether this is a supply contract or a strategic investment without a purchase obligation.
Vulcan Energy: The Central Node of the European System
Vulcan Energy has signed a binding agreement with Glencore to supply between 36,000 and 44,000 tons of lithium hydroxide monohydrate (LHM) over a period of 8 years. The refinery in Germany, with an annual capacity of 24,000 tons, has been defined as the first commercial-scale electrochemical refining application in Europe. The agreement with Glencore covers approximately 18.75% to 22.9% of the refinery’s annual capacity.
The project at Frankfurter Höchst, with a capacity of 24,000 tons/year, was completed and began production in 2027. Vulcan announced long-term contracts with Volkswagen, Stellantis, and LG Energy Solution to supply lithium hydroxide produced from geothermal sources. However, it was not disclosed whether these contracts cover a significant percentage of the refinery’s capacity.
A supply agreement with Stellantis involves deliveries of 81,000–99,000 tons of lithium hydroxide over 5 years, starting in 2026. This volume exceeds the annual capacity of the 24,000-ton refinery by more than 300%. No explanation has been provided as to how this target is compatible with actual production capacity.
BMW: Strategic Investments, Undeclared Contracts
BMW signed a long-term supply agreement with Ganfeng Lithium (China) for 5 years (2020–2024), covering 100% of the lithium hydroxide needs for fifth-generation battery cells. The agreement has now expired, but it is not known whether it has been renewed or replaced by a contract with a non-Chinese producer.
The group signed an agreement with Mangrove Water Technologies (Canada) for a lithium refining plant with sufficient capacity to produce 500,000 electric vehicles per year, funded with $85 million. However, no specific off-take agreement with automakers was indicated. The plant was opened in 2026, but it is not clear whether production has already started or is in the testing phase.
BMW also supported the opening of a commercial lithium refinery in Canada by Mangrove Lithium in 2026, using electrochemical technology. It was not disclosed whether the company has signed an off-take contract for the final product.
Other Players: AMG Lithium and NESI
AMG Lithium began commercial production of lithium hydroxide in Bitterfeld in 2026 with a capacity of 24,000 tons/year, sufficient for 500,000 electric vehicle batteries. Material tests are underway with battery manufacturers and automakers, but it has not been disclosed whether a supply agreement has been signed.
NESSI and Vulcan began construction of a 24,000-ton/year lithium refinery in Germany in 2026. The plant was presented as the first commercial-scale electrochemical refining application in Europe, but no supply agreement with automakers was indicated.
Comparison of Volumes and Capacity
| Refinery | Annual Capacity (tons) | Off-take Contract | Expected Annual Volume | Source |
|---|---|---|---|---|
| Vulcan Energy (Frankfurt) | 24,000 | Stellantis (2026–2030) | 81,000–99,000 tons total over 5 years | InsideEVs |
| Vulcan Energy (Frankfurt) | 24,000 | Glencore (2026–2034) | 36,000–44,000 tons total over 8 years | EQS News |
| Mangrove Lithium (Canada) | Not specified | Not declared | 500,000 electric vehicles/year | Mining.com |
| AMG Lithium (Bitterfeld) | 24,000 | Not declared | 500,000 batteries/year | Handelsblatt |
| NESI-Vulcan (Germany) | 24,000 | Not declared | Not specified | Mining Magazine |
The total volume of lithium hydroxide expected by Stellantis from Vulcan Energy exceeds the annual capacity of the refinery by more than three times. No explanation has been provided as to how this target is compatible with actual production. The agreement with Glencore covers a significant portion of the capacity, but it is not clear whether it is the only one or whether others exist that have not been disclosed.
European refineries are coming into production, but supply contracts with automakers have not been publicly disclosed in a consistent manner. While automakers declare strategic commitments, the quantitative, temporal, and coverage details remain largely unspecified.
Lithium production in Europe is underway, but the transparency of off-take contracts is lacking. Announced volumes often exceed declared capacities, without any explanation being provided.
The withdrawal of BYD and Tsingshan from lithium production projects in Chile has created a strategic gap in the global supply chain for battery raw materials. The two Chinese groups had signed preferential agreements with Corfo in 2023 to receive lithium carbonate from SQM, the second-largest global producer, at discounted prices until 2030. Access to these supplies had been presented as crucial to ensure the supply chain for new battery production plants in Chile, with a combined investment estimated at $523 million.
The canceled operations included a $290 million plant for the production of lithium cathodes and a $233 million project for the production of 120,000 tons/year of lithium iron phosphate (LFP). In total, the projects would have added over 50,000 tons/year of processing capacity to the global market, with a direct impact on approximately 1,200 jobs. However, it is not clear whether the off-take contracts with SQM have been formally terminated or simply suspended. The Corfo document does not specify the legal nature of the withdrawal or the remaining duration of the agreements.
The withdrawal was motivated by the fall in lithium prices, but it was not explained why the two groups chose to abandon projects with guaranteed access to raw materials at preferential prices. While BYD announced its intention to withdraw from both projects, it did not provide any statement on the status of the contracts with SQM. Instead, the company has signed an exclusive agreement with Lithium Australia for battery recycling in Australia, with an initial term of three years and coverage of all end-of-life electric vehicle batteries in that country. This shift marks a change in strategy: from an approach based on new refineries in Chile to a local recycling model in Australia.
The contrast between the two approaches is evident. While in Chile the projects were canceled without public explanation, in Australia the agreement was made public with specific details. The fact that BYD chose to invest in recycling rather than new production in a country with strategic resources such as Chile raises questions about supply priorities. The recycling in Australia covers only the local market, while the projects in Chile could have powered a broader regional value chain.
The NovaAndino Lithium joint venture, launched by Codelco-SQM in December 2025, has played a central role in the attempt to maintain state control over the Salar de Atacama until 2060. The project was presented as a response to the withdrawal of BYD and Tsingshan, but it is not clear whether it has already assumed the previously planned production capacity. State control does not automatically imply equivalent production capacity, nor is it known whether the new investments are able to cover the gap left by the Chinese projects.
| Project | Investment | Annual Capacity | Agreement with SQM | Status |
|---|---|---|---|---|
| Lithium cathode production | $290M | Not specified | Yes, until 2030 | Canceled |
| LFP production | $233M | 120,000 tons | Yes, until 2030 | Canceled |
| Agreement with Lithium Australia | Not specified | Not specified | No | Ongoing |
The withdrawal of BYD and Tsingshan has left a significant portion of unused production capacity without explanation. State control over the Salar de Atacama does not automatically guarantee active production. The lost production capacity, estimated at over 50,000 tons/year, does not appear to be replaced by announced new projects. The global market has lost an opportunity for diversification, while Chile has lost an important source of direct investment and employment.
Lithium Refining in Australia: A System of Technological Dependence and Strategic Contradictions
The Kwinana Lithium Hydroxide Refinery, the first lithium hydroxide refinery in Australia, is operated by a joint venture between Tianqi Lithium (China) and IGO (Australia), with Tianqi holding 51% and decision-making control over financing. The project, started in 2025 with an initial investment of 1 billion dollars, obtained a production license for lithium hydroxide valid until 2046. However, despite the stated commitment to reduce dependence on China, the operational technology and ownership of the Greenbushes mineral – one of the world’s largest lithium deposits – are controlled by a Chinese entity.
The Australian government signed a strategic agreement with the United States in 2025 for the security of the supply chain of critical minerals, with a joint investment of 3 billion dollars. The document recognizes that China controls 90% of the global market for Heavy Rare Earth Elements (HREE), but does not mention specific lithium refining projects. This omission is significant: while an alliance is promoted to reduce dependence on China, the Kwinana refinery – the cornerstone of the Australian program – is operated by a Chinese company with established operational technology and control.
The refinery recorded a negative net profit of 28.7 million dollars in the June 2025 quarter, has never generated a cash surplus in 12 months, and has experienced mechanical problems since 2021. In 2025, Tianqi announced that it would prioritize the “long-term viability” of the project, investing 1.2 million dollars and declaring a unit cost of 406 dollars per ton for spodumene production. However, the actual cost has not been publicly verified, and no subsequent reports after October 2025 explain the reasons for the decline in profitability.
Other initiatives show the same dynamic. Pilbara Minerals signed an agreement with Ganfeng Lithium for a 32,000 tons/year lithium conversion plant, located in Australia. The project uses conversion technologies developed in China, but it was not clarified whether the technology license was granted directly by Ganfeng or by an affiliated entity. MinRes and Ganfeng invested 300 million dollars in the Mt Marion project, with 150 million from each party. The document does not specify who owns the operational technology.
The Pilbara Minerals pilot project with Calix Ltd., based on the patented ‘calcination’ technology, was planned in 2025. However, it is unclear whether the patent was developed in Australia or was acquired by a Chinese company. The Australian government renewed the license for the Kwinana Lithium Hydroxide Refinery in 2025 despite concerns about health and odor. No public report explains why the license was renewed despite the environmental and operational problems.
The presence of Chinese companies in strategic Australian projects is constant: Tianqi holds 51% of the Greenbushes joint venture with Albemarle, and operates the Kwinana refinery. Albemarle closed its Kemerton refinery in 2026 due to high costs and Chinese competition. The Australian government has invested over 3 billion dollars in strategic collaborations to reduce dependence on China, but has not disclosed which projects were excluded or which technologies were made independent.
The contradiction is evident: while the goal of reducing dependence on China is declared, the key projects are operated by Chinese companies with technologies and licenses controlled by foreign entities. Lithium refining in Australia appears to be a system in which strategic independence is declared, but technology and operational control remain in Chinese hands. No source has explained why this model is considered sustainable or strategic.
| Project | Chinese Partner | Investment | Technology or License | Operational Status |
|---|---|---|---|---|
| Kwinana Lithium Hydroxide Refinery | Tianqi Lithium | 1 billion dollars | License renewed until 2046; technology not specified | Net loss since June 2025; persistent mechanical problems |
| Mt Marion Project | Ganfeng Lithium | 300 million dollars (each) | Technology not specified | Investment completed; operational status not declared |
| Pilbara-Calix Project | Not specified | Not available | Patented ‘calcination’ technology | Planned in 2025; progress status not clarified |
| Pilbara-Ganfeng Agreement | Ganfeng Lithium | Not specified | 32,000 tons/year capacity | Agreement signed; operational status not declared |
Lithium refining in Australia appears to be a system in which technological dependence on China is maintained despite declarations of independence. The presence of Chinese companies in key projects, control of licenses, and lack of transparency on costs and operational technology create a situation in which strategic security is declared but not verifiable.
Lithium Refining in Chile: Chinese Technologies, Conditional Agreements, and Autonomy Declarations
The Chilean government has announced a strategy for state control over lithium production, but has not provided a concrete plan to develop independent refining technologies. The Codelco-SQM joint venture, approved by the Chinese People’s Republic’s anti-monopoly regulator (SAMR) on November 10, 2025, was conditioned on guaranteeing a minimum volume of 300,000 tons of lithium carbonate per year for Chinese customers. The Chilean government has not disclosed whether the lithium hydroxide imported from China by Codelco is part of an integrated system that could imply long-term technical dependence. Chilean exports of lithium carbonate to China represent between 45% and 70% of the total between 2021 and 2024, with a significant increase compared to 24.8% in 2013. Despite official statements of strategic autonomy, the Chilean government has not presented a concrete plan for lithium refining.
Albemarle has proposed a direct lithium extraction (DLE) project in the Salar de Atacama with an investment of $3.1 billion, which includes a production capacity of 233,000 metric tons of lithium carbonate equivalent in 2025. The project, under environmental evaluation, includes the recovery of 90% of the treated brine and a reduction in freshwater consumption. However, it was not specified whether the DLE technology used was developed in collaboration with Chinese companies.
The collaboration between SQM and Salinity Solutions (UK) for a water engineering technology pilot involved an investment of $1.27 million from SQM Lithium Ventures. The project was presented as innovative, but it was not clarified whether the technologies being tested could be integrated into a Chinese refining system or were designed to avoid external dependencies.
Chilean exports of lithium carbonate to China represent between 45% and 70% of the total between 2021 and 2024, with a significant increase compared to 24.8% in 2013. The Free Trade Agreement between Chile and China has facilitated access to the Chinese market, but has not included restrictions on the use of Chinese technologies for refining.
Despite official statements of strategic autonomy, the Chilean government has not presented a concrete plan for lithium refining. On the contrary, key projects appear to be conditioned by decisions in the Chinese market, with supply obligations and non-discrimination conditions. Chinese technology is present in key projects, but is never explicitly mentioned as part of the production system. The lack of a national technology strategy leaves open the question of who actually controls the added value of Chilean lithium.
Chinese control over the lithium supply chain has been consolidated through a combination of strategic acquisitions, conditional regulatory approvals, and restrictions on the export of key technologies. Tianqi Lithium, a Chinese company, holds 23.77% of the shares of SQM in Chile and 51% of the Greenbushes mine in Australia, positioning itself as a central player in the global production of raw lithium. The Atacama deposit, managed by SQM, contains 1.7 billion tons of lithium in carbonate equivalent (LCE), while Greenbushes holds 2.1 billion tons of LCE. According to official Chinese statements, at least 60% of non-Chinese refining capacity depends on technologies developed in China. However, no public source specifies which Chinese companies license refining technologies in Australia or Chile. The Chinese Ministry of Commerce updated the catalog of technologies prohibited for export in 2025, including processes for lithium ore extraction, production of lithium carbonate and hydroxide, as well as technologies for purification from saline solutions and lithium-containing liquids. These restrictions cover the entire production chain, from raw ore to lithium metal.
The Chinese government has imposed conditions on the approval of the Codelco-SQM joint venture in Chile, announced on November 11, 2025, by the National Commission for the Regulation of the Market (SAMR). The approval was conditioned on guaranteeing stable access to lithium for Chinese customers, with prices not exceeding 15% of the international benchmark. The Chinese Ministry of Industry and Information Technology has also approved technology standards for lithium refining in 2026, with specifications for high-efficiency separation and purification processes, including crystallization, membranes, and closed-loop metallurgy. These standards do not mention foreign companies or projects, but indicate a clear orientation towards technological homogenization of the supply chain.
Tianqi Lithium’s net profit in 2025 was 463 million yuan, an increase of 105.85% compared to 2024. 40% of the profit was attributed to revenues from SQM, despite the company announcing the sale of 1.25% of SQM shares by February 2026. The transfer of SQM management to Codelco is expected in 2031, with an agreement that includes an increase of 30% in the production capacity of lithium carbonate by that date. However, it is not clear whether this expansion will be achieved with Chinese technologies or with alternative partnerships.
According to the International Energy Agency (IEA), China holds 73% of the global refined lithium market in 2024, and is expected to surpass Australia in lithium production by 2026. Australia, with 43% of global production in 2025, is the main producer of raw lithium, but its refining capacity is limited. The Chinese government has promoted the participation of Chinese companies in foreign projects, such as the case of Tianqi in Chile, through strategic development policies. However, it has not been disclosed whether these projects include technology transfers or operational licenses.
China has a lithium ore deposit in Hunan with 490 million tons of ore and 1.31 million tons of lithium oxide. The Chinese industry has also approved technology standards for lithium refining in 2026, with processes that reduce energy consumption and CO2 emissions. However, no official document specifies which foreign plants have obtained licenses to apply these standards.
According to Ganfeng Lithium, the demand for lithium could increase by 30-40% in 2026, with prices for lithium carbonate potentially reaching 200,000 yuan/ton. In this context, Chinese control over refining and technology appears not only strategic but also operational. However, it is not clear whether Chinese companies have provided licenses for refining in Australia or Chile, nor which foreign projects have access to technologies prohibited for export. Chinese authorities and major players have not made public the details of technology transfer.
TAGS_SUGGERITI: lithium, refining, Australia, China, Europe, batteries, supply chain, electric cars
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