China Halts Lithium Extraction Adsorbent Exports, Raising Trade War Concerns

Beijing tightens grip on critical mineral supply chain, impacting EV battery industry

China's decision to halt the export of lithium extraction adsorbents has raised serious concerns about the deepening U.S.-China trade conflict. According to a report by Reuters, Jiangsu Zhuhai Tech, a leading Chinese manufacturer, notified its clients that it had ceased exporting lithium extraction adsorbents as of February 1. Another major producer, Sunresin, is reportedly in negotiations with the Chinese government regarding lithium-related technology exports.

Lithium extraction adsorbents are essential in separating lithium from brine and other sources, making them a crucial component in the global electric vehicle (EV) battery supply chain. With China being the world's largest producer of these materials, the suspension of exports is expected to disrupt global supply networks. However, exact figures on China’s production and market share remain unclear due to the government's reluctance to disclose detailed data.

Reports indicate that Chinese Ministry of Commerce officials have visited multiple companies to discuss export control measures. A Chinese legal expert, speaking anonymously to Reuters, revealed that authorities even warned a company to halt a $1 billion export contract currently under negotiation. This suggests that while the export ban is technically imposed by individual firms, government pressure is playing a significant role in enforcing these restrictions.

This move follows China's announcement on January 2 that it would tighten export controls on battery component manufacturing and rare metal processing technologies. The newly restricted technologies include battery cathode material production, as well as specific lithium and gallium extraction techniques. This decision has already had tangible effects on Western automotive markets, as companies scramble to secure alternative supply sources.

The impact extends beyond the EV industry. U.S. oil companies that rely on lithium extraction technology are also expected to face setbacks. ExxonMobil, for instance, had been considering Chinese processing equipment for its lithium project in Arkansas. Similarly, Standard Lithium, a major lithium developer in North America backed by Koch Industries, had previously reached an agreement to use Chinese-made adsorbents in its operations.

This latest development is widely seen as a response to escalating trade tensions between China and the United States. After U.S. President Donald Trump imposed a 10% universal tariff on Chinese goods, Beijing has retaliated with its own set of countermeasures, including tariff hikes and export restrictions.

With China leveraging its dominance in critical minerals to exert pressure on the U.S., this export ban marks a significant escalation in the ongoing trade dispute. While it remains to be seen how strictly these restrictions will be enforced, the move has already heightened uncertainty in global supply chains and signaled a new phase in the U.S.-China trade war.