Assessing the global sustainability implications of China’s lithium-ion battery sector using value chain analysis

Sustainable supply chain management (SSCM) of critical raw materials (CRMs) is instrumental for the low-carbon transitions. Recent literature has emerged mapping CRMs’ physical flows and analysing their current degree of circularity. However, limited research has focused on the understanding of the patterns of value-added creation along the supply chain, as a critical step in assessing long-term sustainability through rethinking how value is retained and created in circular loops. This paper develops a value chain analysis (VCA) model, with a consideration of value retaining processes (VRPs), which combines physical and monetary value flows of lithium (Li) for China’s lithium-ion batteries (LIBs) sector. The results indicate that the largest stages of value creation in China’s LIBs supply chain are Li chemicals refining and LIBs-powered products production, while an estimated economic loss happens at end-of-life (EOL). Results also highlight three main issues that affect value addition in the whole chain, including: (1) price volatility of upstream raw materials; (2) VRPs conducted at EOL; (3) international trade dynamics in the downstream LIBs and LIBs-powered products. Therefore, targeted policies to enhance CRMs traceability along LIBs value chain and stringent regulatory requirements for EOL recovery are needed to enhance resilience, maintain value, and sustainability. These need to be accompanied by international cooperation to globally address lithium supply chain risks and reduce associated impacts.