Variegated decoupling: Australian firm strategies in the lithium global production network

Abstract

Since 2020, lithium has rapidly risen to prominence as a ‘critical mineral’ for the global energy transition, given its essential role in both battery electric vehicles and grid-scale storage. While 33 % of global lithium is mined in Australia (as the mineral spodumene), making it the world’s largest raw material supplier, over 97 % of this is refined in China. At the same time, with a general deterioration of relations between China and ‘The West’, pressure has been growing to reduce or eliminate China’s role in Western supply chains. Beyond this general impulse, however, there lies a huge degree of variation, at the firm level, in the extent to which lithium production and trade is being reconfigured in response to these geopolitical dynamics. In this paper we deploy a global production network (GPN)-inspired analysis to interrogate these variations. Using a new dataset of contracts negotiated by Australian lithium firms, our analysis explores the impact of geopolitical pressures on the strategies of lithium firms in Australia and Sino-Australian linkages in lithium. We parse a range of different corporate strategies shaped by the extent to which firms are seeking to move downstream into processing activities and/or decouple from Chinese networks, enabling more nuanced understandings of the links between shifting geopolitical contexts and production network-level dynamics. Overall, our analysis explains why, rather than following a straightforward decoupling path, Australian and Chinese firms are likely to maintain relationships through trade and investment in lithium mining and refining at least until altered economic opportunities or geopolitical pressures develop.