US official accuses China of unfair lithium trade

The Asian nation is oversupplying the global market in order to eliminate competition, the under secretary of state claims

China is oversupplying lithium and undermining prices as it seeks to corner the global market for the critical metal, a senior US official has said, according to Reuters.

Jose Fernandez, the under secretary for economic growth, energy and the environment at the US Department of State, made the claims late Monday during a visit to Portugal - Europe's biggest producer of lithium.

Fernandez told a briefing that China was producing much more lithium "than the world needs today, by far."

"That is an intentional response by the People's Republic of China to what we are trying to do" with the Inflation Reduction Act, Fernandez said. "They engage in predatory pricing... (they) lower the price until competition disappears. That is what is happening," he claimed.

China is the world's third-biggest producer of lithium, behind Chile and Australia. It is used to make batteries that are vital for consumer electronics and electric vehicles. Lithium is considered a "pillar for the fossil-fuel free economy" by the UN, as it is expected to become the primary way to store energy in the clean power grids of the future.

However, the cost of lithium has plunged more than 80% in the past year largely due to overproduction from China and slowing demand for electric cars.

Fernandez said the low price "constrains our ability to diversify our supply chains on a broad, global scale." He also claimed that it hurts countries such as Portugal that need investment to develop these industries.

The EU, which receives 97% of its lithium for batteries from China, has been aiming to ramp up mining in order to break the Asian country's grip on the market.

In July, the bloc imposed steep tariffs on electric vehicles imported from China following an anti-subsidy probe. Brussels said it was seeking to stem the flood of low-priced EVs from the Asian economic superpower to protect its own manufacturers.

The EU's move followed Washington's tariff hike on Chinese EVs from 25% to 100% in May.

Beijing has said these actions violate global trade rules, filing a WTO complaint over what it called Washington's "discriminatory" requirements for electric vehicle subsidies. It also launched investigations into European imports of brandy, dairy, and pork products. On Tuesday, the Chinese Ministry of Commerce announced provisional tariffs on brandy originating from the EU.