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China wants to be No. 1 in electric cars, so it needs copper and cobalt. Where does it find its most helpful suppliers and allies? On Canadian stock markets

Robert Friedland, the founder and executive co-chairman of Vancouver’s Ivanhoe Mines, calls copper “the new oil." By that, he means copper is essential to the new electrified, battery-powered economy in the same way oil, a century ago, was essential to the era of mass mobility. Copper’s conductivity – its ability to transmit electricity – is superb. You cannot build a smartphone, an electrical grid or an electric car without copper, and lots of it.

China has figured out that copper and other common and rare minerals are essential to its long-term industrial ambitions. It wants to own the source of those minerals, rather than buying them on the spot market. The country’s leaders believe that whoever controls the minerals controls the end product, not just domestically, but globally. Call it an extreme form of vertical integration – from mine site to retail channel.

China can't do this alone and, as unlikely as it sounds, it has found some of its most helpful enabling partners among Canadian companies.

Friedland is one of China’s strongest and most visible allies. Ivanhoe Mines controls the Kamoa-Kakula copper play in the Democratic Republic of Congo (DRC) – the world’s biggest undeveloped copper project. It is a joint venture with China’s Zijin Mining, which owns 9.7% of Ivanhoe. In September, the Chinese conglomerate CITIC bought 19.4% of Ivanhoe, taking total Chinese ownership to more than 29% and surpassing Friedland’s own stake of 17%. In time, Ivanhoe may evolve into a Chinese company, with a direct-to-China copper pipeline.

Much of China's industrial ambitions are focused on electric vehicles. To make EVs and their battery-driven power systems, you need hefty amounts of copper, nickel and cobalt, as well as lithium for lithium-ion batteries. The Copper Development Association of the United States estimates that the average pure-electric car contains 83 kilograms of copper, more than five times as much as is used in a car with an internal combustion engine. The charging points needed to juice up the EVs also require a lot of copper.

When North Americans think of electric cars, they think of Tesla, the manufacturer founded by Elon Musk that dominates the U.S. EV industry. The company’s stock market value is higher than either that of General Motors or Ford. But it is China that is stealing the show. Six of the world’s 10 largest EV makers are Chinese.

They include BYD, whose vehicle and battery output is bigger than Tesla's.

China considers the EV industry to be strategic and, by all accounts, wants to dominate it. The country plans to ban the sale of gasoline and diesel vehicles by 2040. Le Monde Diplomatique forecasts that 80% of the world's EVs will be built in China by 2020. The International Energy Agency says China, in 2017, was already by far the largest EV market, with sales growing 72%, to 580,000 vehicles. The American tally was 280,000. China has deployed almost all of the world's electric buses and last year had more than four times as many vehicle charging stations as the United States. Yet, in many ways, China is just getting started in the EV game.

China had a little help from its friends, more than a few of them Canadian. In this case, the Canadians' motto could be “follow the leader.”

Take Glencore, the Swiss-based mining and commodities-trading giant. Through its 86% control of Toronto-listed Katanga Mining, Glencore is the biggest industrial producer of cobalt in the DRC, which provides two-thirds of the global supply of the metal. Cobalt is an essential component of the batteries EV makers use (about 15% of a Tesla battery is cobalt; most of the rest is nickel). Earlier this year, Glencore signed a long-term contract to supply one-third of its cobalt output to Jingmen Gem, a Chinese battery company. There is speculation that Glencore is open to selling all of its cobalt operations in the DRC to China.

There's more. Chengdu Chempys Chemical Industry, a Chinese maker of battery-grade lithium hydroxide, recently became the biggest shareholder of Vancouver-based NRG Metals, a small exploration company working on a promising lithium project in Argentina. Chemphys has agreed to buy all the potential production from the project.

Canadian-listed companies such as Katanga and Ivanhoe weren’t immediately obvious partners in China’s push into the EV industry, but the timing is perfect. Friedland has taken one of the biggest leaps so far into the country’s electrification pool. He can even sell content for passengers to watch in an EV: Ivanhoe Pictures focuses on Asian movies and programs, and co-produced the hit comedy Crazy Rich Asians.

The balance of power in one of the world's fastest-growing industries is shifting toward China, and savvy Canadian investors are going along for the ride.

Eric Reguly is an award-winning columnist with The Globe and Mail based in Rome. You can reach him at or on Twitter @ereguly

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