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Foreign Manufacturers Still Flock to China

Japanese electronics maker Panasonic has built a new consumer Lithium-ion factory in Suzhou, China. While the plant is located on the premises already owned by Panasonic, the new facility is a manifestation of an ongoing trend of foreign manufacturers moving their production sites into China in order to mitigate reduced access to and increased costs for critical minerals. Interestingly, the move comes at a time when the Japanese government pursues policies aimed at reducing its dependence on Chinese mineral imports.

Rising wages in China, and with that increased production costs, may be slowing the trend of manufacturers flocking to China to a degree, however the lure of metals and minerals cannot be dismissed. As American Resources principal Dan McGroarty phrased it in a piece for Real Clear World last October:

The magnet drawing American automakers to China these days isn’t metaphorical: It is quite literally the Rare Earths magnets and other metals-based components critical to batteries and parts necessary for mass electric vehicle production. Just as we have seen with solar panel and wind turbine producers, China has the metals – and where the metals are, manufacturing will follow.

Unlike with Rare Earths, China may not have the near-total supply monopoly for Lithium. It is, however, one of the top-three suppliers for U.S. manufacturers, who, according to USGS data, are more than 80 percent dependent on foreign-sourced Lithium. Meanwhile, domestic Lithium reserves, while not necessarily abundant, are available. With Lithium usage on the rise, it is entirely possible that the mineral, which is currently only featured on the American Resources “Watch List” may make our “Risk Pyramid” of critical metals and minerals in future years.

With China ready to play politics with its mineral supplier status, the time to focus on exploring and developing our domestic mineral resources is now.