It's officially exploded the war of electric cars and the subsequent hunt for Lithium, a crucial metal for the manufacture of batteries. And it's not just a clash, yet another, between USA and China, but also a North American derby and in which a Brazil plays a crucial role, which is the world's fifth largest lithium producer and its largest trading partner Beijing.
China's BYD overtakes Tesla
The bomb is dropped on Financial Times, which after the news that the Chinese Byd surpassed the American Tesla as the world's leading producer of electric vehicles in the last quarter of 2023, investigated the case further, discovering that Byd is about to acquire Brazil's largest lithium reserve, in the State of Minas Gerais, with an expected maximum capacity of 270 thousand tons per year. And why would this be a North American fratricidal clash? For three reasons.
Elon Musk's eyes on the lithium reserve in Brazil
First, because he had his eye on that mine Elon Musk, owner of Tesla; second, because the one who could steal it from him could be a group of which Warren Buffett's Berkshire Hathaway is a shareholder; third, because the Brazilian reserve is now owned by a Canadian company, Sigma Lithium, which would therefore have no problem encouraging Asian competition.
Sigma Lithium, valued at just under 3 billion dollars and listed on Wall Street, preferred not to comment on the indiscretion, which instead was confirmed to the Financial Times by the president of Byd Brasil, Alexandre Baldy. Also because Sygma's accounts are not going very well and selling now would make sense: global demand for lithium, according to the International Energy Agency, will increase by 400% between now and 2040, but at this stage there is an excess of offer, which led to a price reduction and therefore to a loss, for the Canadian company, of almost 20 million dollars in the first nine months of 2023, with the stock having lost more than 30% on the stock market in the last six months.
Volkswagen's interest
For Sygma, last year, they also showed interest Volkswagen and another Chinese group, the battery manufacturer Catl. In the global race for raw materials essential for the energy transition, this would be a great coup from BYD, which has just dethroned its American rivals by exceeding 3 million electric cars manufactured in 2023, of which 1,6 million are full electric.
The deal would also be important in view of the technological supremacy so coveted by Beijing, given that the ability to sell electric cars in large quantities and at low cost is due to the control of the entire supply chain, from raw materials to batteries and microchips . Furthermore, China is already the third largest producer of lithium in the world, and a fast track is being built in South America: in addition to Brazil, it is present in Chile and Argentina, which are respectively the second and fourth world producers (the first is Australia, with almost half of the total).
Buffet wages war on Musk
Faced with this threat, the logic of personal affairs seems to prevail in North America, and therefore Buffett wages war on Musk and even a Canadian group is keeping its hands free, after last year the Prime Minister Justin Trudeau, in a protectionist key, had blocked the investment of three Chinese groups in mining companies listed on the Toronto Stock Exchange, accusing them of "slave labour", that is, of enslaving workers. Without meaning to, Trudeau had hit the point when speaking at the Council on Foreign Relations in New York: “If we're honest, lithium produced in Canada will be more expensive. Because we don't use slave labor."
