Cross-Border Ownership and Input Access: Evidence from the Lithium Supply Chain

Kei Irizawa

AI summary · arXiv: 2611.08430v1 · econ.GN

Cross-Border Ownership and Input Access: Evidence from the Lithium Supply Chain

Kei Irizawa

Original paper Submitted to arXiv on 05 Nov. 2026 License: NONEXCLUSIVE-DISTRIB 1.0 Also in: fr

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The essentials

A model of lithium mining and refining shows that ownership changes can reshape ore sourcing without securing domestic access, while export restrictions cut global output when other regions lack refining capacity.

Question

How do cross-border ownership links affect access to ore and global lithium supply? How do ownership divestiture and restrictions on ore exports compare in their effects on sourcing, production, and prices?

Method

The author estimates an ownership-weighted model of mining, refining, and brine production using a global panel of mines and refineries covering 2015–2024, alongside prices, regional demand, costs, capacities, and ownership data. Joint GMM estimates demand and technology-specific cost parameters; the model is then solved for 2024 counterfactuals, holding capacity and entry fixed, including divestiture of Chinese stakes in overseas producers and a ban on ore exports to China.

Findings

Result Under observed ownership portfolios, divestiture raises spot ore purchases by 20.93% but changes total lithium output by only 0.06%.
See the passage in the paper
Spot ore purchases increase by 20.93% and the ore price rises, but lithium output increases by only 0.06%.
Authors’ interpretation The small aggregate output response to divestiture reflects brine expansion largely offsetting a contraction in hard-rock refining.
See the passage in the paper
The resulting expansion in brine production largely offsets the contraction in hard-rock refining.
Result When Chinese refining interests are hypothetically pooled, divestiture raises lithium output by 2.22% while spot ore purchases fall by 2.72%.
See the passage in the paper
Relative to each environment’s pre-divestiture benchmark, lithium output rises by 2.22% under pooling, compared with 0.06% under observed portfolios.
Result The ore export ban reduces global lithium output by 25.36% and raises the world lithium price by 77.19%.
See the passage in the paper
the ban reduces it by 25.36% and raises the world lithium price by 77.19%.
Authors’ interpretation At existing capacities, production outside China replaces only part of the Chinese output lost under the ban, limiting the ability of other regions to offset the supply decline.
See the passage in the paper
production outside China replaces only 41.0% of China’s lost output.

Limitations

The counterfactuals hold capacity and entry fixed, so they do not capture supply responses through new or expanded facilities.
See the passage in the paper
Within each comparison, capacity, entry, estimated parameters, and royalties remain fixed, while mines’ spot commitments, refinery sourcing and production, and prices adjust.
The model’s proportional-control mapping from equity stakes to influence is an approximation and may not capture voting thresholds, minority protections, or conflict rules.
See the passage in the paper
These arrangements do not establish exact proportionality between equity and influence: voting thresholds, minority protections, and conflict rules can separate the two.

Why it matters

The analysis shows that ownership transfers and trade restrictions are not equivalent tools for securing mineral inputs: divestiture leaves trade routes open, whereas export restrictions can sharply reduce global supply. The authors argue that ownership incentives must be considered alongside refining capacity, since redirected ore cannot sustain production without facilities able to process it.

Written by AI from the paper. Passages are checked word for word against the text we analysed; the rest may contain errors.

AI-generated keywords: lithium cross-border ownership vertical integration ore trade refining capacity

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Comprehensive Summary
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Original abstract

Kei Irizawa’s paper examines how cross-border ownership affects access to lithium ore and the supply of refined lithium. It asks whether transferring foreign ownership of overseas mines can secure inputs for domestic refiners, and how that approach compares with restricting ore exports. The analysis focuses on Chinese stakes in overseas producers and China’s dominant position in lithium refining. The paper assembles global data on mines and refineries from 2015 to 2024, covering production, capacity, costs, ownership, market prices, and regional demand. It estimates a model linking mining, ore sourcing, and lithium production. In the model, producers place weight on the profits of firms in which their owners also hold stakes. Vertical ownership can make affiliated ore effectively cheaper for a refiner, while giving mines an incentive to limit sales that could benefit competing refiners. Shared ownership among downstream competitors can also discourage output expansion. Mines choose spot supply first; refiners then select ore sources and output. Brine producers compete without using traded ore. The author uses the estimated model to conduct 2024 counterfactuals, holding capacity and entry fixed. Demand and cost parameters are estimated jointly, and the estimated demand elasticity is −0.511. In the main divestiture exercise, Chinese stakes in overseas hard-rock mines and an integrated brine operation are transferred to independent local owners, while trade remains open. Spot ore purchases rise by 20.93%, from about 440,000 to 532,000 tonnes of lithium carbonate equivalent, while ownership-linked purchases fall by 47.84%. The ore price rises by 0.76%. Global lithium output, however, increases by only 0.06%. Hard-rock output falls by 1.90%, while brine output rises by 3.17%, largely offsetting the decline. Thus, shifting toward spot trading does not guarantee cheaper ore or a substantial increase in lithium supply, and Chinese refiners can still purchase overseas ore. The paper also considers a hypothetical pooling of Chinese owners’ refining interests. This scenario represents stronger coordination around producer profitability; it is not an estimate that such coordination actually occurs. Under pooling, divestiture raises lithium output by 2.22%, but spot ore purchases fall by 2.72%. Brine output expands by 10.34%, as the affected operation has less incentive after divestiture to protect the profits of a broader set of competing refiners. This comparison shows that the effect on ore trading depends on downstream competition and on whether production shifts toward brine, which does not require traded ore. Finally, the author compares divestiture with a hypothetical ban on overseas ore shipments to China. In the model, the ban reduces global lithium output by 25.36% and raises the world lithium price by 77.19%. China’s ore price rises by 157.02%, while the price outside China falls by 65.01%. Cheaper ore and a higher lithium price encourage production elsewhere, but refineries outside China reach capacity and replace only 41.0% of China’s lost output. Brine production expands but does not make up the difference. The paper concludes that changing ownership does not reserve ore for domestic users when trade remains open. Restricting trade, by contrast, can impose a substantial global supply cost when alternative refining capacity is insufficient. These are model-based, short- to medium-run counterfactuals, not evaluations of specific policies or long-run investment responses. Capacity, entry, and estimated technologies are held fixed, and the results depend on assumptions about ownership incentives, purchasing rights, and firm conduct. The author identifies investment in refining capacity outside China as an important topic for future analysis.

Does Owning Overseas Lithium Mines Secure Supply?

Lithium has become a strategic input for batteries, but owning a stake in an overseas mine does not necessarily mean a country can secure more of its output. In “Cross-Border Ownership and Input Access: Evidence from the Lithium Supply Chain,” Kei Irizawa examines how ownership links between mines and refiners shape ore purchasing and global lithium production.

The paper focuses on China, which holds stakes in overseas lithium producers and occupies a dominant position in lithium refining. It compares two ways of seeking supply security: transferring foreign mine ownership to independent local owners while keeping trade open, and restricting shipments of ore to China. The results suggest that neither ownership nor trade barriers have straightforward effects—and that restrictions can carry a large cost for global supply.

How Ownership Can Shape the Market

Irizawa assembles global data on mines and refineries from 2015 to 2024. The data cover production, capacity, costs, ownership, market prices, and regional demand. The analysis then estimates a model connecting mine production, ore sourcing, and refined lithium output. Its estimated demand elasticity is −0.511.

In the model, companies place weight on the profits of other firms in which their owners also hold stakes. This creates incentives that go beyond the price of ore alone. A refiner may treat ore from an affiliated mine as effectively cheaper, while the mine may have reason to limit sales that would help competing refiners. Shared ownership among downstream competitors can also discourage them from expanding output.

The timing of decisions matters too. Mines first choose how much ore to offer on the spot market. Refiners then select ore sources and decide how much lithium to produce. Brine producers are different: they do not need traded hard-rock ore to make lithium.

What Happens When Chinese Stakes Are Transferred?

For its main 2024 counterfactual, the paper transfers Chinese stakes in overseas hard-rock mines and an integrated brine operation to independent local owners. Trade remains open, and the exercise holds capacity and entry fixed. In other words, it asks how ownership changes affect production under existing short- to medium-run constraints, not how firms might invest over many years.

After divestiture, spot ore purchases rise by 20.93%, from about 440,000 to 532,000 tonnes of lithium carbonate equivalent. Meanwhile, ownership-linked purchases fall by 47.84%. Yet the increase in spot buying does not translate into a substantial expansion of global supply: total lithium output rises by just 0.06%. The ore price increases by 0.76%.

Production shifts between technologies. Hard-rock output falls by 1.90%, while brine output grows by 3.17%, largely offsetting the decline. The findings challenge a simple expectation that independent ownership will make ore cheaper or unlock a large increase in supply. They also show that Chinese refiners can continue buying overseas ore when trade remains open, even after Chinese ownership stakes are removed.

Why Downstream Competition Changes the Result

The paper also considers a hypothetical pooling of Chinese owners’ refining interests. This is a way to model stronger coordination around producer profitability; it is not evidence that such coordination actually occurs.

In this scenario, divestiture increases lithium output by 2.22%, but spot ore purchases fall by 2.72%. Brine output rises by 10.34%. After divestiture, the affected brine operation has less incentive to protect the profits of a wider group of competing refiners, so its production expands. Because brine does not require traded ore, output can grow even as spot purchases decline.

The contrast between the scenarios is important: the effect of ownership changes on ore trading depends on downstream competition and on whether production shifts toward brine. More spot buying is not the same thing as more lithium production.

The Much Larger Cost of an Ore-Export Ban

Irizawa’s final comparison examines a hypothetical ban on overseas ore shipments to China. In the model, this restriction reduces global lithium output by 25.36% and raises the world lithium price by 77.19%. China’s ore price rises by 157.02%, while the price outside China falls by 65.01%.

Lower ore prices and higher lithium prices encourage production outside China, but replacement is limited. Refineries elsewhere reach capacity and replace only 41.0% of China’s lost output. Brine production also expands, but not enough to close the gap. The result is a sharp reduction in global supply despite increased production incentives elsewhere.

What the Findings Do—and Do Not—Show

The central takeaway is that changing ownership does not reserve ore for domestic refiners when trade remains open. Restricting trade can redirect access, but under the modeled capacity constraints it imposes a substantial cost on global lithium supply. For supply security, the availability of refining capacity outside China may be as important as who owns the mines.

These findings are model-based counterfactuals, not assessments of specific policies or forecasts of long-run outcomes. Capacity, entry, and estimated technologies are held fixed, and results depend on assumptions about ownership incentives, purchasing rights, and firm conduct. The paper points to investment in refining capacity outside China as an important subject for further analysis.

Created on 09 Nov. 2026

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Weekly letter Presented in "Economics and finance this week" of 9 November 2026. Economics and finance this week: When prices, protection and ownership change the rules

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Cross-Border Ownership and Input Access: Evidence from the Lithium Supply Chain

The essentials

Question

Method

Findings

Limitations

Why it matters

Read further

Definitions

Does Owning Overseas Lithium Mines Secure Supply?

How Ownership Can Shape the Market

What Happens When Chinese Stakes Are Transferred?

Why Downstream Competition Changes the Result

The Much Larger Cost of an Ore-Export Ban

What the Findings Do—and Do Not—Show

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