China's Role in the Global Lithium Chain: Refining Dominance and What It Means for Argentina

A dominance rooted not in mines, but in processing

When discussing the global lithium chain, it is often assumed that power lies with whoever controls the deposits. The reality is more nuanced: extraction is relatively distributed among Australia (hard rock), South America's Lithium Triangle (brines) and, to a lesser extent, China. The real bottleneck sits in the middle of the chain, in refining and chemical conversion, where China processes a far greater share than it extracts from its own territory.

Industry estimates place China at around 60-70% of the world's lithium refining capacity, and above 70% of battery cell production. A large portion of Australian spodumene travels to Chinese plants to be converted into battery-grade hydroxide or carbonate. In other words: even minerals extracted outside China end up adding value within its industry.

How that position was built

China's leadership was neither accidental nor recent. It reflects an industrial policy sustained for more than a decade, which integrated the chain vertically: from mining investments abroad to the development of national champions in batteries such as CATL and BYD, including refining capacity and the production of cathodes, anodes and electrolytes. On top of this came a vast domestic electric vehicle market, driven by subsidies and regulation, which guaranteed demand to scale up.

The result is an ecosystem hard to replicate in the short term. It is not just about building a chemical plant, but about having specialized suppliers, mature process engineering, competitive capital costs and an accumulated learning curve. That industrial density is the real barrier to entry for other countries.

What it means for Argentina as a carbonate exporter

Argentina has established itself as the world's fifth-largest lithium producer and one of the central names in the Lithium Triangle, with low-cost brines in the Puna of Catamarca, Salta and Jujuy. However, its current position is that of a supplier of basically processed raw material: the country mainly exports lithium carbonate, much of which is destined, directly or indirectly, for China's conversion and battery industry.

This implies a structural dependence on demand and on prices set downstream in the chain. When the lithium cycle cooled between 2023 and 2024, with price drops that took carbonate from peaks above USD 70,000 per tonne to ranges of USD 10,000-15,000, Argentine producers felt the volatility fully. Selling at the lower-value-added links leaves the country exposed to decisions made elsewhere in the world.

Diversification efforts: why they are so costly

The United States, the European Union and other players are seeking to reduce their dependence on China through incentives for local refining, preferential trade agreements and regional content requirements, such as those in the U.S. Inflation Reduction Act. The rationale is geopolitical as well as economic: batteries are a critical input for the energy transition and defense, and relying on a single dominant supplier is perceived as a risk.

Nevertheless, diversification advances slowly. Building competitive refining capacity outside China requires years, patient capital and an integration of suppliers that does not yet exist in the West. Meanwhile, battery demand keeps growing, which in practice reinforces China's role even when the rhetoric aims to reduce it. For raw-material-producing countries, this scenario opens a window of opportunity: to be reliable suppliers for alternative chains seeking to secure supply.

Argentina and the Puna facing the value-added dilemma

For Argentina, the challenge is clear: how to capture more value from a resource it holds in abundance. The RIGI, in force since 2024, offers a framework of stability and tax incentives for large investments, and could facilitate not only new extraction projects but, eventually, more sophisticated processing plants. Direct lithium extraction (DLE) technology also emerges as a way to improve efficiency and reduce water impact in the Puna's salt flats.

The strategic opportunity lies in positioning the country as a diversified supplier in a market looking for alternatives to Chinese dominance, without falling into the illusion of total autonomy that no individual player possesses. Moving toward battery-grade hydroxide or carbonate, attracting investment in conversion and consolidating predictable rules would be concrete steps. The Puna has the resource; the open question is how much of the value chain it will be able to retain within its own territory.