EMAILED ON May 31, 2018 BY Wes Schlagenhauf

A Chinese company now holds the power to more than half the world’s lithium supplies

Chinese lithium supplier Tianqi Lithium recently paid more than $4B to become the second-largest shareholder in Sociedad Quimica y Minera (SQM), a Chilean mining company that specializes in the precious metal needed to make lithium-ion batteries…

And now, Chile has excavated some drama 

In March, the Chilean government filed a complaint with antitrust regulators, worried that giving Tianqi so much control over lithium could viciously “distort the market.”

So, the Chinese government did what any industrial powerhouse would do — threaten their way to a deal and send a rather charged warning that blocking it could harm their “bilateral relations.”

The subtext: You wouldn’t want to harm your bilateral relations with a certain industrial powerhouse, now would you, Chile?

Or maybe they would…

Every smartphone and fully electric car in the world is powered by lithium-ion technology, and, as the world continues to buy more, industry analysts predict that the lithium-ion battery market is set to grow at an astonishing pace of 19% per year.

What’s more, China wants electric cars to make up 20% of all new vehicles sold in the country by 2025, up from just 3% in 2017. According to Quartz, if the deal finalizes, China could potentially buy SQM’s lithium at lower than market costs, which would affect the profits the Chilean government makes on lithium sales (AKA, this is about taxes).

Long story short, it looks like Chile’s argument for price distortion is valid, and now they have until August to decide whether they want to rock China’s lithium-powered boat.