Lithium (Metal)

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U.S. Limits China’s Ability to Benefit From Electric Vehicle Subsidies

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The Biden administration issued new rules to prevent Chinese firms from supplying parts for electric cars set to receive billions of dollars in tax credits.The Biden administration proposed new rules on Friday aimed at shifting more production of electric vehicle batteries and the materials that power them to the United States, in an attempt to build up a strategic industry now dominated by China.The rules are meant to limit the role that firms in China can play in supplying materials for electric vehicles that qualify for federal tax credits. They will also discourage companies that seek federal funding to build battery factories in the United States from sourcing materials from China or Russia.The rules could encourage shifts in automotive supply chains, which continue to rely heavily on China for materials and components of electric vehicles. Automakers are also facing intense cost pressures as they try to modify their factories to make electric cars, and China offers some of the most advanced and lowest-priced battery technology in the world.The Biden administration is trying to use billions of dollars in new federal funding to change that dynamic and create a U.S. supply chain for electric vehicles.The climate law that President Biden signed in 2022 includes up to $7,500 in tax credits to consumers who buy electric vehicles made in the United States using largely domestic materials. The law also included a general ban on Chinese products. Lawmakers mandated that firms in China, Russia, North Korea and Iran be prohibited from providing certain materials to cars that received those tax breaks.But the law left open several questions, including what constitutes a Chinese or Russian company. Administration officials said those definitions included any entity that was incorporated or had headquarters in China or Russia, as well as any firm in which 25 percent of the board seats or equity interest was held by Chinese or Russian governments.Chinese companies that set up operations outside China appear to be able to benefit from the rules as long as the Chinese government is not a significant shareholder. That provision came as a relief to some automakers, which feared that the Biden administration might bar them from contracting with Chinese-owned mines or factories in the United States or other parts of the world.Lithium hydroxide is processed at a facility in Bessemer City, N.C. American companies are investing in factories and technologies aimed at developing the materials needed for electric vehicle.Travis Dove for The New York TimesThe law also requires battery makers that strike contracts or licensing agreements with Chinese firms to ensure that they are retaining certain rights over their projects. That provision is intended to make sure a Chinese firm is not effectively in control of such a project.Some conservative lawmakers had challenged Ford Motor’s plans to license technology from the Chinese battery giant known as CATL for a plant in Marshall, Mich., arguing that such a partnership should not be eligible for federal tax credits. Some Republican lawmakers suggested on Friday that the Treasury Department’s guidance did not go far enough to lessen the country’s dependence on China.“At a time when China is using massive subsidies to undercut U.S. manufacturers and throttle the global market for battery components, Treasury’s naïve new regulations would open the floodgates for American tax dollars to flow to Chinese companies complicit in trade violations and forced labor abuses,” said Representative Mike Gallagher of Wisconsin, chairman of the House Select Committee on the Chinese Communist Party. The rules kick in for battery components in 2024, and in 2025 for critical minerals like lithium, cobalt and nickel. They could be adjusted depending on industry comment.The rules could have a profound impact on the U.S. electric vehicle market, which is rapidly growing — battery-powered vehicles made up about 8 percent of new cars sold in the third quarter. Car and battery makers said Friday that they were still reviewing the rules, and that it would take time to determine how many models would qualify for tax credits.Tesla said on Friday that the two least expensive versions of its Model 3 sedan would qualify for only half the $7,500 credit starting in January. The Model Y sport utility vehicle also might not qualify for the full credit after Dec. 31, Tesla said. The Model Y and Model 3 are the top two electric vehicles by sales in the United States. Tesla buys some batteries from CATL.John Bozzella, the chief executive of Alliance for Automotive Innovation, wrote in a blog post Friday that the rules struck “a pragmatic balance,” including by exempting trace materials. If the administration had banned all minor Chinese parts from the supply chain, no car models might have qualified for tax credits next year, he said.Many cars have already been disqualified from purchase credits by other rules, like a requirement that vehicles be assembled in North America. Only about 20 vehicles currently qualify for the program out of more than 100 electric vehicles sold in the United States.The rules also raised new questions about whether stricter requirements for supply chains could continue a trend of driving more shoppers to lease, rather than buy, vehicles.The prohibition on sourcing from China applies only to vehicles that are sold, not to those that are leased. Consumers can receive tax credits for electric vehicles they lease from auto dealers, and that has led to a boom in E.V. leasing.Jack Fitzgerald, chairman of Fitzgerald Auto Malls, which operates dealerships in Florida, Maryland and Pennsylvania, said he had seen a spike in customers leasing electric vehicles. But he said concern about electric vehicle range and the availability of chargers, more than price, was holding back electric vehicle sales.“That’s the principal thing,” Mr. Fitzgerald said.Auto industry lobbyists have warned that extremely strict rules could stifle electric vehicle sales, and they have urged the administration to strike more trade deals to secure supplies of scarce battery minerals. But Paul Jacobson, the chief financial officer of General Motors, said the company had structured its electric vehicle operations to be successful regardless of the federal rules.“We’re not anchoring the business on saying this has to happen” with regard to regulations, Mr. Jacobson told reporters on Thursday. If regulations change, he added, “it’s not a backbreaking thing for us.”While the rules may create headaches for automakers, they are likely to benefit companies planning to supply batteries from factories in the United States.“It’s actually good news for us,” said Siyu Huang, chief executive of Factorial, a Massachusetts company that is developing next-generation electric vehicle batteries with support from Mercedes-Benz, Hyundai and Stellantis, the owner of Dodge, Jeep and Ram.Acquiring large amounts of lithium, an essential ingredient in batteries, could be difficult because most of the metal is processed in China, Ms. Huang said. But the rules will encourage investment in U.S.-based refineries, she continued. “Its definitely going to be another incentive to build more domestic supply,” Ms. Huang said.John DeMaio, chief executive of Graphex Technologies, which is building a factory in Michigan to process graphite for batteries, said the rules might temporarily slow electric vehicle sales by making it harder to qualify for the tax credit. But in the long run, he added, they will encourage investment in domestic suppliers.“It might be a hiccup,” he said, “but in general it provides certainty and clarity to get people off the fence.”Wally Adeyemo, the deputy secretary of the Treasury Department, said in a briefing with reporters that the rules would help advance the administration’s goals of building up an American clean energy supply chain while also cutting emissions in the transportation sector.“These changes take time, but companies are making the investments and Americans are buying these cars,” he said.Over the past year, companies have invested $213 billion in the manufacturing and deployment of clean energy, clean vehicles, building electrification and carbon management technology in the United States, according to tracking by the Rhodium Group and the Center for Energy and Environmental Policy Research at the Massachusetts Institute of Technology. That is a 37 percent increase from a year earlier..A lithium mine in northern Quebec. A majority of the world’s lithium and cobalt is processed in China.Brendan George Ko for The New York TimesStill, the global electric vehicle industry remains heavily anchored in China, which is the world’s largest producer and exporter of electric vehicles. China produces about two-thirds of the world’s battery cells, and refines most of the minerals that are key to powering an electric vehicle.The rules also restrict automakers from sourcing nickel used in their batteries from Russia, which is one of the world’s largest nickel producers.One of the challenges for automakers will be developing systems to track all the components of their battery through a long, and often opaque, supply chain.Vehicles that are reported incorrectly will be subtracted from an automaker’s eligibility for tax credits, Treasury said, and automakers that commit fraud or intentionally disregard the rules could be declared ineligible for the credit in the future. More

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    Global Car Supply Chains Entangled With Abuses in Xinjiang, Report Says

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    A new report on the auto industry cites extensive links to Xinjiang, where the U.S. government now presumes goods are made with forced labor.The global auto industry remains heavily exposed to the Xinjiang region of China for raw materials, components and other supplies, a new report has found, despite a recent U.S. law intended to restrict purchases from the area, where the Chinese government has committed human rights abuses against mostly Muslim minorities.The report, from a team of researchers led by Laura T. Murphy, a professor of human rights and contemporary slavery at Britain’s Sheffield Hallam University, details the links between Chinese companies with deep ties to Xinjiang and the automakers that use their supplies, such as metals, batteries, wiring and wheels.The report identifies major Chinese companies that the researchers determined have participated in coercive labor programs in Xinjiang, or have recently sourced their materials and products from the region, where China has engaged in mass internment of Uyghurs and other minorities. Those Chinese firms are major participants in the global supply chain for auto parts, the report says, raising the likelihood that automakers like Volkswagen, Honda, Ford Motor, General Motors, Mercedes-Benz Group, Toyota and Tesla have sold cars containing raw materials or components that have at some point touched Xinjiang.“There was no part of the car we researched that was untainted by Uyghur forced labor,” Dr. Murphy said. “It’s an industrywide problem.”Such links could pose serious problems for the international auto brands. The Biden administration, like the Trump administration before it, has taken an increasingly aggressive posture toward Chinese trade violations and imports of goods made with forced labor, which the United Nations estimates affects 28 million people worldwide.Under the Uyghur Forced Labor Prevention Act, products made wholly or partly in Xinjiang are now assumed to have been produced with forced labor, making them vulnerable to seizure by the federal government if they are brought into the United States. Customs officials say that since the law went into effect in June, they have stopped roughly 2,200 shipments — valued at more than $728 million — that were suspected of having Xinjiang content. More than 300 of those products were ultimately released into the United States.Federal officials did not disclose what kinds of products have been seized. But the new rules have been particularly disruptive for companies making clothing and solar panels, which source raw materials like cotton and polysilicon from Xinjiang.The New York Times has not independently verified the entire contents of the new report, which names roughly 200 companies, both Chinese and international, with potential direct or indirect links to Xinjiang. Many of the Chinese industrial giants named in the report have multiple production sites, meaning they could be supplying international automakers with metal, electronics or wheels made from their factories outside Xinjiang.The global supply chain for auto parts is vast and complex. According to estimates by McKinsey and Company, the average automotive manufacturer may have links to as many as 18,000 suppliers in its full supply chain, from raw materials to components.Many of those suppliers run through China, which has become increasingly vital to the global auto industry and the United States, the destination for about a quarter of the auto parts that China exports annually. Xinjiang is home to a variety of industries, but its ample coal reserves and lax environmental regulations have made it a prominent location for energy-intensive materials processing, like smelting metal, the report says.Chinese supply chains are complicated and opaque, which can make it difficult to trace certain individual products from Xinjiang to the United States. Over the past three years, Xinjiang and other parts of China have been intermittently locked down to keep the coronavirus at bay. Even before the pandemic, the Chinese government tightly controlled access to Xinjiang, especially for human rights groups and media outlets.Determining the extent of coercion that any individual Uyghur worker may face in Xinjiang’s mines or factories is also difficult given the region’s restrictions. But the overarching environment of repression in Xinjiang has prompted the U.S. government to presume that any products that have touched the region in their production are made with forced labor unless companies can prove otherwise.Workers in the region “don’t have a chance to say no,” said Yalkun Uluyol, a Xinjiang native and one of the report’s authors. Goods coming from Xinjiang “are a product of the exploitation of the land, of the resources and of the people,” he said.The report’s researchers identified numerous documents — including Chinese-language corporate filings, government announcements and ocean import records — indicating that international brands, at the very least, have multiple potential exposures to programs in Xinjiang that the U.S. government now defines as forced labor.Dr. Murphy said her team had identified nearly 100 Chinese companies mining, processing or manufacturing materials for the automotive industry operating in the Uyghur region, at least 38 of which had publicized their engagement in repressive state-sponsored labor programs through their social media accounts, corporate reports or other channels.International automakers contacted by The Times did not contradict the report but said they were committed to policing their supply chains against human rights abuses and forced labor.G.M., Volkswagen and Mercedes said their supplier codes of conduct prohibited forced labor. Honda said its suppliers were required to follow global sustainability guidelines. Ford said it maintained processes to ensure that its global operations, including in China, complied with all relevant laws and regulations.Toyota, in a statement, said, “We expect our business partners and suppliers to follow our lead to respect and not infringe upon human rights.”Tesla did not respond to repeated requests for comment.The Chinese government has insisted that there are no human rights violations in Xinjiang, and has called accusations of forced labor in Xinjiang “the lie of the century.”“‘Forced labor’ in Xinjiang is a lie deliberately made up and spread by the U.S. to shut China out of the global supply and industrial chains,” Liu Pengyu, the spokesman at the Chinese Embassy in Washington, said in a statement.Some of the Chinese companies named in the report are enormous industry suppliers that have proudly advertised their role in carrying out the Chinese government’s policies toward Uyghurs in social media postings, or in glossy annual reports.They include China Baowu Steel Group, the world’s largest steel maker, which has a subsidiary in Xinjiang that accounts for at least 9 percent of its total steel production, according to the report. Baowu and its subsidiaries make springs for car suspension systems, axles and body panels, as well as various kinds of steel that feed the supply chains of most international carmakers.In its 2020 corporate social responsibility report, which pledges adherence to China’s leader and the Communist Party, Baowu Group said that its subsidiary had “fully implemented the party’s ethnic policy” and that 364 laborers from poor families from villages in southern Xinjiang had “been arranged with employment.” Human rights advocates say the terms are euphemisms for organized mass transfers of Uyghur laborers into factories.According to the report, Baowu Group subsidiaries have participated in other transfers of workers from poor regions of Xinjiang, and in so-called poverty alleviation programs, which the United States now recognizes as a guise for forced labor. Under the new law, companies that participate in such programs can be added to a blacklist that blocks the products they make anywhere — even outside Xinjiang — from coming to the United States.The new report also builds on a June investigation published by The Times into Xinjiang’s role in producing electric vehicle battery minerals like lithium and nickel, as well as previous research by a firm called Horizon Advisory into the aluminum industry in Xinjiang. The report identifies recent transfers of Uyghur laborers at some of the world’s biggest aluminum companies, and traces these products to major auto industry suppliers, some of whom made shipments to the United States, Canada or Europe as recently as November, shipping records show.It also documents ties to Xinjiang and transfers of Uyghur workers for dozens of other significant auto industry suppliers, such as Double Coin, a tire maker that sells widely in the United States, including online at Walmart and Amazon.And it documents a recent investment by CATL — a Chinese firm that produces roughly a third of the world’s electric vehicle batteries and supplies Tesla, Ford, G.M., Volkswagen and other brands — in a major new lithium processing company in Xinjiang.Zhang Yizhi, a spokesman for CATL, said the company was a minority shareholder in the Xinjiang company and was not involved in its operations or management. CATL is committed to building a responsible supply chain and strictly opposes and prohibits any form of forced labor in its suppliers, he said.Baowu Group, Double Coin and its parent, Shanghai Huayi Group, did not respond to repeated requests for comment. Amazon declined to comment about its sale of Double Coin tires, while Walmart did not respond.The research suggests that the United States still has far to go in stopping the flow of goods linked to Xinjiang. Customs officials say they are working to enforce a ban on such products, but they are still hiring aggressively and working to build out the department’s capacity to identify and stop these goods.“We’re still in an upward trajectory,” said AnnMarie R. Highsmith, the executive assistant commissioner of the Office of Trade at Customs and Border Protection, in an interview in October.“Unfortunately,” she added, “the situation globally is such that we are going to have full employment for a while.” More

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    Red Flags for Forced Labor Found in China’s Car Battery Supply Chain

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    The photograph on the mining conglomerate’s social media account showed 70 ethnic Uyghur workers standing at attention under the flag of the People’s Republic of China. It was March 2020 and the recruits would soon undergo training in management, etiquette and “loving the party and the country,” their new employer, the Xinjiang Nonferrous Metal Industry Group, announced.But this was no ordinary worker orientation. It was the kind of program that human rights groups and U.S. officials consider a red flag for forced labor in China’s western Xinjiang region, where the Communist authorities have detained or imprisoned more than 1 million Uyghurs, ethnic Kazakhs and members of other largely Muslim minorities.The scene also represents a potential problem for the global effort to fight climate change.China produces three-quarters of the world’s lithium ion batteries, and almost all the metals needed to make them are processed there. Much of the material, though, is actually mined elsewhere, in places like Argentina, Australia and the Democratic Republic of Congo. Uncomfortable with relying on other countries, the Chinese government has increasingly turned to western China’s mineral wealth as a way to shore up scarce supplies.That means companies like the Xinjiang Nonferrous Metal Industry Group are assuming a larger role in the supply chain behind the batteries that power electric vehicles and store renewable energy — even as China’s draconian crackdown on minorities in Xinjiang fuels outrage around the world.The Chinese government denies the presence of forced labor in Xinjiang, calling it “the lie of the century.” But it acknowledges running what it describes as a work transfer program that sends Uyghurs and other ethnic minorities from the region’s more rural south to jobs in its more industrialized north.Xinjiang Nonferrous and its subsidiaries have partnered with the Chinese authorities to take in hundreds of such workers in recent years, according to articles displayed proudly in Chinese on the company’s social media account. These workers were eventually sent to work in the conglomerate’s mines, a smelter and factories that produce some of the most highly sought minerals on earth, including lithium, nickel, manganese, beryllium, copper and gold.It is difficult to trace precisely where the metals produced by Xinjiang Nonferrous go. But some have been exported to the United States, Germany, the United Kingdom, Japan, South Korea and India, according to company statements and customs records. And some have gone to large Chinese battery makers, who in turn, directly or indirectly, supply major American entities, including automakers, energy companies and the U.S. military, according to Chinese news reports.It is unclear whether these relationships are ongoing, and Xinjiang Nonferrous did not respond to requests for comment.But this previously unreported connection between critical minerals and the kind of work transfer programs in Xinjiang that the U.S. government and others have called a form of forced labor could portend trouble for industries that depend on these materials, including the global auto sector.A new law, the Uyghur Forced Labor Prevention Act, goes into effect in the United States on Tuesday and will bar products that were made in Xinjiang or have ties to the work programs there from entering the country. It requires importers with any ties to Xinjiang to produce documentation showing that their products, and every raw material they are made with, are free of forced labor — a tricky undertaking given the complexity and opacity of Chinese supply chains.A Critical Year for Electric VehiclesAs the overall auto market stagnates, the popularity of battery-powered cars is soaring worldwide.Charging Stations: The Biden administration unveiled proposed regulations that would require stations built with federal dollars to be located no more than 50 miles apart.General Motors: The company hopes to become a leading force in the electric vehicle industry. Its chief executive shared how G.M. intends to get there.Turning Point: Electric vehicles still account for a small slice of the market, but this year, their march could become unstoppable. Here’s why.New Materials: As automakers seek to electrify their fleets and to direct electricity more efficiently, alternatives to silicon are gaining traction.The apparel, food and solar industries have already been upended by reports linking their supply chains in Xinjiang to forced labor. Solar companies last year were forced to halt billions of dollars of projects as they investigated their supply chains.The global battery industry could face its own disruptions given Xinjiang’s deep ties to the raw materials needed for next-generation technology.Trade experts have estimated that thousands of global companies may actually have some link to Xinjiang in their supply chains. If the United States fully enforces the new law, it could result in many products being blocked at the border, including those needed for electric vehicles and renewable energy projects.Some administration officials raised objections to cutting off shipments of all Chinese goods linked with Xinjiang, arguing that it would be disruptive to the U.S. economy and the clean energy transition.Representative Thomas R. Suozzi, a Democrat from New York who helped create the Congressional Uyghur Caucus, said that while banning products from the Xinjiang region might make goods go up in price, “it’s too damn bad.”“We can’t continue to do business with people that are violating basic human rights,” he said. To understand how reliant the battery industry is on China, consider the country’s role in producing the materials that are critical to the technology. While many of the metals used in batteries today are mined elsewhere, almost all of the processing required to turn those materials into batteries takes place in China. The country processes 50 to 100 percent of the world’s lithium, nickel, cobalt, manganese and graphite, and makes 80 percent of the cells that power lithium ion batteries, according to Benchmark Mineral Intelligence, a research firm.“If you were to look at any electric vehicle battery, there would be some involvement from China,” said Daisy Jennings-Gray, a senior analyst at Benchmark Mineral Intelligence.The materials Xinjiang Nonferrous has produced — including a dizzying array of valuable minerals, like zinc, beryllium, cobalt, vanadium, lead, copper, gold, platinum and palladium — have gone into a wide variety of consumer products, including pharmaceuticals, jewelry, building materials and electronics. The company also claims to be one of China’s largest producers of lithium metal, and its second-largest producer of nickel cathode, which can be used to make batteries, stainless steel and other goods.Xinjiang Non-Ferrous Metal Industry Group was one of the region’s earliest miners, operating the state-owned No. 3 pegamite mining pit beginning in the 1950s.Shen Longquan/Visual China Group, via Getty ImagesIn recent years, the company has expanded into Xinjiang’s south, the homeland of most Uyghurs, acquiring valuable new deposits that executives describe as “critical” to China’s resource security.Ma Xingrui, a former aerospace engineer who was appointed Communist Party secretary of Xinjiang in 2021, has talked up Xinjiang’s prospects as a source of high-tech materials. This month, he told executives from Xinjiang Nonferrous and other state-owned companies that they should “step up” in new energy, materials and other strategic sectors.Xinjiang Nonferrous’s role in work transfer programs ramped up several years ago, as part of efforts by the Chinese leader Xi Jinping to drastically transform Uyghur society to become richer, more secular and loyal to the Communist Party. In 2017, the Xinjiang government announced plans to transfer 100,000 people from southern Xinjiang into new jobs over three years. Dozens of state-owned companies, including Xinjiang Nonferrous, were assigned to absorb 10,000 of those laborers in return for subsidies and bonuses.Transferred workers appear to make up only a minor part of the labor force at Xinjiang Nonferrous, perhaps a few hundred of its more than 7,000 employees. The company and its subsidiaries reported recruiting 644 workers from two rural counties of southern Xinjiang from 2017 to 2020, and training more since then.Some laborers were sent to the company’s copper-nickel mine and smelter, which are operated by Xinjiang Xinxin Mining Industry, a Hong Kong-listed subsidiary that has received investment from the state of Alaska, the University of Texas system and Vanguard. Other laborers went to subsidiaries that produce lithium, manganese and gold.Before being assigned to work, predominantly Muslim minorities were given lectures on “eradicating religious extremism” and becoming obedient, law-abiding workers who “embraced their Chinese nationhood,” Xinjiang Nonferrous said.Inductees for one company unit underwent six months of training including military-style drills and ideological training. They were encouraged to speak out against religious extremism, oppose “two-faced individuals” — a term for those who privately oppose Chinese government policies — and write a letter to their hometown elders expressing gratitude to the Communist Party and the company, according to the company’s social media account. Trainees faced strict assessments, with “morality” and rule compliance accounting for half of their score. Those who scored well earned better pay, while students and teachers who violated rules were punished or fined.Even as it promotes the successes of the programs, the company’s propaganda hints at the government pressure on it to meet labor transfer goals, even through the coronavirus pandemic.A 2017 article in the Xinjiang Daily quoted one 33-year-old villager as saying that he was initially “reluctant to go out to work” and “quite satisfied” with his income from farming, but was persuaded to go to work at Xinjiang Nonferrous’ subsidiary after party members visited his house several times to “work on his thinking.” And in a visit in 2018 to Keriya County, Zhang Guohua, the company president, told officials to “work on the thinking” of families of transferred laborers to ensure that no one abandoned their jobs.Chinese authorities say that all employment is voluntary, and that work transfers help free rural families from poverty by giving them steady wages, skills and Chinese-language training.“No one has been forced to become ‘transferred labor’ in Xinjiang,” Wang Wenbin, a spokesman for the Chinese foreign ministry, told reporters in Beijing this month.It is difficult to ascertain the level of coercion any individual worker has faced given the limited access to Xinjiang for journalists and research firms. Laura T. Murphy, a professor of human rights and contemporary slavery at Sheffield Hallam University in Britain, said that resisting such programs is seen as a sign of extremist activity and carries a risk of being sent to an internment camp.“A Uyghur person cannot say no to this,” she said. “They are harassed or, in the government’s words, educated,’ until they are forced to go.”Files from police servers in Xinjiang published by the BBC last month described a shoot-to-kill policy for those trying to escape from internment camps, as well as mandatory blindfolds and shackles for “students” being transferred between facilities.Other Chinese metal and mining companies also appear to be linked with labor transfers at a smaller scale, including Zijin Mining Group Co. Ltd., which has acquired cobalt and lithium assets around the globe, and Xinjiang TBEA Group Co. Ltd., which makes aluminum for lithium battery cathodes, according to media reports and academic research. Other entities that were previously sanctioned by the United States over human rights abuses are also involved in the supply chain for graphite, a key battery material that is only refined in China, according to Horizon Advisory, a research firm.An indoctrination center in Hotan, China. In 2017, the regional government announced plans to transfer 100,000 people from the cities of Kashgar and Hotan in southern Xinjiang into new jobs.Gilles Sabrié for The New York TimesThe raw materials that these laborers produce disappear into complex and secretive supply chains, often passing through multiple companies as they are turned into auto parts, electronics and other goods. While that makes them difficult to trace, records show that Xinjiang Nonferrous has developed multiple potential channels to the United States. Many more of the company’s materials are likely transformed in Chinese factories into other products before they are sent abroad.For example, Xinjiang Nonferrous is a current supplier to the China operations of Livent Corporation, a chemical giant with headquarters in the United States that uses lithium to produce a chemical used to make automobile interiors and tires, hospital equipment, pharmaceuticals, agrochemicals and electronics.A Livent spokesman said that the firm prohibits forced labor among its vendors, and that its due diligence had not indicated any red flags. Livent did not respond to a question about whether products made with materials from Xinjiang are exported to the United States.In theory, the new U.S. law should block all goods made with any raw materials that are associated with Xinjiang until they are proven to be free of slavery or coercive labor practices. But it remains to be seen if the U.S. government is willing or able to turn away such an array of foreign goods.“China is so central to so many supply chains,” said Evan Smith, the chief executive of the supply chain research company Altana AI. “Forced labor goods are making their way into a really broad swath of our global economy.”Raymond Zhong More

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    Battling for Bolivia’s Lithium That's Vital to Electric Cars

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    SALAR DE UYUNI, Bolivia — The mission was quixotic for a small Texas energy start-up: Beat out Chinese and Russian industrial giants in unlocking mineral riches that could one day power tens of millions of electric vehicles.A team traveled from Austin to Bolivia in late August to meet with local and national leaders at a government lithium complex and convince them that the company, EnergyX, had a technology that would fulfill Bolivia’s potential to be a global green-energy power. On arriving, they found that the conference they had planned to attend was canceled and that security guards blocked the location.Still, the real attraction was in plain sight: a giant chalky sea of brine high in the Andes called the Salar de Uyuni, which is rich in lithium, among several minerals with growing value worldwide because they are needed in batteries used in electric cars and on the power grid.Surrounded by rusty equipment, empty production ponds and pumps uncoupled from pipes, it seemed a forlorn spot. But to Teague Egan, EnergyX’s chief executive, it had nothing but promise.“This is the new Saudi Arabia,” he promised.The Indigenous Quechua people revere the Salar de Uyuni, 4,000 square miles of salt flats that their forebears believed were the mixture of a goddess’s breast milk and the salty tears of her baby. For Mr. Egan, the site is “pure white beauty as far as the eye can see.”With a quarter of the world’s known lithium, this nation of 12 million people potentially finds itself among the newly anointed winners in the global hunt for the raw materials needed to move the world away from oil, natural gas and coal in the fight against climate change.Eight foreign companies have been competing in recent months to establish pilot lithium projects here, including four from China and one from Russia, countries that have had friendlier relations with Bolivia’s government than the United States has.Just as wildcatters have long sought riches prospecting for oil, the clean energy revolution is spawning a wave of gritty entrepreneurs who hope to ride a new boom, vaulting themselves into the intersection of geopolitics and climate change. Some are familiar names like Elon Musk at Tesla, while Mr. Egan and others are strivers looking for their first break in mineral-rich places like Bolivia, the Democratic Republic of Congo and the South Pacific.Mr. Egan is among the determined underdogs. His company, with 30 employees, is one of two from the United States among the eight contenders to develop Bolivia’s lithium reserves.Lithium is a basic component of lithium-ion batteries, enabling the flow of electrical currents. Because of the metal’s light weight, long life, large storage capacity and easy recharging, demand is expected to grow exponentially over the next decade to power an expanding fleet of vehicles produced by Tesla, Ford Motor, General Motors and other carmakers and spread power grid battery storage for renewable energy. This year alone, prices for lithium compounds are up over 200 percent on several global markets.Mr. Egan, 33, had never worked in the energy industry before starting EnergyX in 2018 to pursue lithium projects. With his hair slicked back, frequently unshaven and wearing his baseball cap backward, he projects youthful exuberance and self-confidence.He established a book club at his company and assigned a biography of Thomas Edison as the first offering to send a message to his colleagues: “You can try 100 times and give up. Edison tried 17,000 plants to produce domestic rubber.”Despite the bravado, he would appear to be an unlikely character to drive Bolivia’s energy future. He has never worked in Latin America and speaks virtually no Spanish.But for Mr. Egan, the only thing that is really important is his belief that his technology to coax the lithium out of the Andean brine is the best to finally make Bolivia an energy power.“In Bolivia they are so sensitive about the politics,” he said. “I just don’t understand why they should not do what is in the best interest of the country. I can only control what I can control.”.css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-1g3vlj0{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-1g3vlj0{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-1g3vlj0 strong{font-weight:600;}.css-1g3vlj0 em{font-style:italic;}.css-1g3vlj0{margin-bottom:0;margin-top:0.25rem;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}‘The Lithium Is for Bolivians’There is much that Mr. Egan cannot control in this country long riddled with coups and racial, ideological and regional divisions.Bolivia’s governing party, the Movement for Socialism, is led by former President Evo Morales, who tried to draw the country closer to China before protests and the military forced him from power two years ago.The current president, Luis Arce, who was Mr. Morales’s economy minister, heads a coalition of social democrats and more doctrinaire leftists. He faces challenges from local movements that object to the socialist government and are wary of foreign interests, seeing them as exploiters of Bolivia’s mineral wealth going back to the 17th century.Only two years ago, a lithium deal between Mr. Morales and a German company led to protests that eventually spread around the country. Mr. Morales was forced to scrap a contract only a week before he fled the country.Marco Pumari, a local politician who led the protests, demanded a tripling of royalties for Potosí Province and local involvement in ownership of lithium enterprises. He said that his demands had not changed, and that his opposition to the ruling socialists remained steadfast.“As soon as they publicly choose the foreign companies, the province will mobilize,” he said in an interview. “The government is playing with fire.”In August, about 80 protesters took over two roads, blocking Mr. Arce from visiting government lithium facilities and demanding that he fire the new head of the state-owned lithium company and give local residents greater say in decisions about lithium production. The protest forced the cancellation of the conference that Mr. Egan and his EnergyX team were scheduled to attend.“We need asphalt roads and textile factories,” said Rosa Belen Julaca, a Potosí quinoa farmer who joined the protest even though she generally supports the government. “If they don’t listen to us, we’ll keep blocking the roads.”Government officials soon visited to calm tensions.Women poured colorful confetti on the heads of officials and draped their necks in wreaths of flowers. The visitors included Franklin Molina, the energy minister, and the head of the state lithium company, whom the protesters had wanted ousted.At a festive community meeting punctuated by Indigenous music, dance and poetry, they promised jobs and social programs from a lithium industry that would someday include manufacturing batteries and even electric cars.“The lithium is for Bolivians,” Mr. Molina declared to cheers.Energy experts say a major increase in Bolivian lithium production would keep battery prices down, helping President Biden achieve his goal of electrifying half of new cars sold in the United States in 2030, up from 4 percent today.“The amount of lithium we need in any of our climate goals is incredible,” said Anna Shpitsberg, the U.S. deputy assistant secretary of state for energy transformation. “Everyone is trying to build up their supply chains and think about how to be strategic.”But Washington has little sway in Bolivia, whose leaders have long disagreed with the American approach to drug policy and Venezuela. That may explain why some energy executives do not think Bolivia is worth the risk.“You’ve had 30 years’ worth of projects in Bolivia with almost nothing to show,” said Robert Mintak, chief executive of Standard Lithium, a publicly traded mining company based in Vancouver, British Columbia, referring to lithium development efforts dating back to 1990. “You have a landlocked country with no infrastructure, no work force, political risk, no intellectual property protection. So as a developer, I would choose someplace else that is safer.”Mr. Egan sees the odds differently.‘I Need to Be Involved’That Mr. Egan has gotten this far is a marvel. He learned about Bolivian lithium only by chance when he and a friend crisscrossed South America as tourists in 2018.When they got to the salt flats, a guide explained that they were standing on the world’s largest lithium reserve. “I thought, ‘I don’t know how I’m going to do this, but I need to be involved,’” Mr. Egan said.He had tried his hand as a sports and music agent and ran a small investment fund at the time. He had invested in Tesla in 2013 at $9 a share; it now trades around $975. (He would not reveal how many shares he had bought and how many he still had.)But he felt that he wasn’t achieving much. Before Mr. Egan traveled to South America, his father, Michael, the founder of Alamo Rent A Car, advised him to make two lists — of his five biggest passions and of the five industries he thought would grow fastest in the coming decades. Renewable energy was on both lists.Mr. Egan read up on lithium. He settled on filtering membranes as the vital missing link to make lithium evaporation ponds more productive and profitable. Then he came across a 2018 paper written by Benny Freeman, a chemical engineering professor at the University of Texas at Austin, and some scientists working in Australia about a new type of membrane with atom-size pores that could be used to separate and purify lithium salts from rocks and brines.He traveled to Austin and Australia, and Mr. Egan and Dr. Freeman hit it off.Teague Egan at the Salar de Uyuni, which he called “the new Saudi Arabia.”The two made an unlikely pair. Dr. Freeman, 60, was born into poverty in rural North Carolina and was the first person in his family to graduate from high school. Mr. Egan grew up wealthy in southern Florida. Dr. Freeman became passionate about chemistry handling pesticides on his family’s apple farm. Mr. Egan said he had learned business skills from his father at the dinner table.Mr. Egan returned again and again to Bolivia, but he made little progress selling officials on his technology. “All these people, their hands are just tied behind their backs,” he said, since they are scared to offend leaders at the top.A big break came in April 2020 when Diego von Vacano, a Bolivian political science professor at Texas A&M University — and an informal adviser to Mr. Arce, then a leading presidential candidate — contacted Dr. Freeman for advice on lithium extraction. Dr. Freeman connected Dr. von Vacano and Mr. Egan, and the Texas A&M professor became Mr. Egan’s vital bridge to Bolivia.After Mr. Arce won, Mr. Egan attended the inauguration. With Dr. von Vacano’s help, Mr. Egan made critical connections in the new administration.He was not able, though, to secure a meeting with the new president. During one trip, he tracked down Mr. Arce when they were both in Santa Cruz. Accompanied by Dr. von Vacano, Mr. Egan finally got a glimpse of the president eating in the canvas-covered wooden stalls of a fish market.But as he approached the leader, Dr. von Vacano stopped him. Mr. Arce was eating with a congressman antagonistic toward the United States. Avoiding a scene, Mr. Egan walked away. He returned home, but he was not done trying.A Visit and a BlessingMr. Egan discussing strategy with his team after learning that the conference they flew to Bolivia to attend had been canceled.In August, after the conference was canceled, Mr. Egan and his team flew to La Paz, the seat of government, and kept knocking on doors, hoping to capitalize on the contacts that Mr. Egan had made among top Energy Ministry officials.As always, there were hurdles.When they met with Carlos Humberto Ramos, the newly appointed head of the state lithium company, to persuade him of the advantages of their approach, they found that he had little understanding of EnergyX’s membrane technology.Mr. Egan’s team returned to Mr. Ramos the next day, and after explaining its technology to his top technicians, the team was told that it could visit the lithium complex and that an initial agreement approving EnergyX’s project was virtually a done deal.That night, EnergyX’s strongest ally in the government — Álvaro Arnez, a deputy energy minister overseeing lithium development — gave the arrangement his blessing. He joined Mr. Egan’s team for a celebration at an elegant La Paz restaurant over plates of dried Amazonian catfish and roast pork with pear kimchi.The next morning, Mr. Egan and his team flew back to the salt flats.They inspected several shimmering man-made ponds, which hold brine for evaporation — a method of lithium extraction that has been hampered by heavy seasonal rains.Even when dry, the lithium must be separated chemically from other minerals, a process that wastes much of the desired lithium.Mr. Egan told technicians that his technology could greatly increase and speed up production.There were disagreements over where to put the proposed pilot project, and when Mr. Egan suggested ways to move forward toward commercialization, the technicians told him to wait until initial test results were in. But he was content that he toured the facilities before other companies.In an interview, Mr. Molina, the energy minister, said Chinese and Russian diplomats were lobbying on behalf of their own companies, but he insisted that “there is room for Americans, Russians, Chinese, Japanese, whoever wants to invest as long as they respect our sovereignty.”China has advantages. It already controls substantial lithium assets in South America, and its businesses have made roughly $4.5 billion in lithium investments over the last three years in South America and Mexico. Chinese banks give low-interest loans to Chinese mining and construction companies operating abroad to advance President Xi Jinping’s plans to dominate industries of the future.As for Russia, President Vladimir V. Putin has spoken by phone with Mr. Arce at least twice about lithium and other matters, Russian officials said.Mr. Egan said he was getting virtually no help from the U.S. government. And American officials say their best hope is to gently press for a level playing field.The long game has paid off for Mr. Egan, at least so far. He signed an agreement to start the pilot, and in October he shipped a container to Bolivia outfitted with pumps, valves, tanks and membranes to separate lithium from brine. If the pilot shows promising results, he may be able to proceed with a commercial project.Of the 20 companies in competition at the start of the year, the government has named eight to carry out pilots, including one other small American company, Lilac Solutions of California.All the contenders — the eighth is from Argentina — will be competing for Bolivian government attention and resources like power hookups and skilled local technicians in the months ahead before any can be approved to move toward commercial operations.“We still need to do a demonstration and scale it up,” Mr. Egan acknowledged. “We still need to go commercial. I mean, this is just Day 1.” More

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    Biden Administration Moves to Unkink Supply Chain Bottlenecks

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    A swath of recommendations calls for more investments, new supply chains and less reliance on other countries for crucial goods.WASHINGTON — The Biden administration on Tuesday planned to issue a swath of actions and recommendations meant to address supply chain disruptions caused by the coronavirus pandemic and decrease reliance on other countries for crucial goods by increasing domestic production capacity. More