Playing the board, not the square: Network Positioning in Lithium Supply Chains

In Brief

Influence in lithium supply chains rests less on sitting at a chokepoint and more on the strength and reciprocity of your relationships. Trade data shows upstream producers with diversified, high‑value partnerships suffer roughly 20–30% less revenue volatility in price crashes than volume‑only exporters.

Simulations and case studies suggest that adding targeted, mutual partnerships can cut vulnerability by 5–10% and sharply raise an actor’s clout in the network.The real game is one of positioning, not postcode.

Lithium now moves over a million tonnes a year, enough white gold to keep the electric‑vehicle boom humming from Shanghai to Stuttgart. Ore is dug out of Australia’s red dust and South America’s salt flats, refined overwhelmingly in China—which controls about 90% of global capacity—and then disappears into batteries assembled by manufacturers from Tesla to CATL.

Commentary tends to obsess over chokepoints: refineries, ports, or straits where “everything must pass,” and the notion that whoever controls the bottleneck controls the game. Trade records from 2021–2025 paint a less romantic picture: lasting influence comes not from where you sit on the map, but from how you are wired into everyone else—who you deal with, whether those ties run both ways, and how many alternative routes those ties create.

Connections vs. Cargo tonnage

Start with the basic picture: think of the lithium trade as a web. Each participant is a node and every transaction is a link. Counting partners is the most rudimentary measure of importance; more partners look better, but this ignores whether those partners themselves matter. A more revealing view asks three core questions: Are you connected to actors that others also care about?; How often do flows between others have to pass through you, rather than simply around you?; How many of your relationships represent genuine two‑way commitments, rather than one‑sided dependence? That last question is key.

Producers who banked on sheer volume—shipping raw ore to one or two dominant buyers—discovered the cost of thin, one‑way ties when prices fell roughly 80% from their 2022 peaks to 2025 troughs. Revenues went into freefall for these volume merchants, while firms with stable, reciprocal contracts saw balance sheets wobble rather than crack. Network models of the 2021 lithium trade quantify this exposure. They assign each actor a vulnerability score between zero (robust) and one (highly exposed), based on how much of their trade flows through partners who themselves lack alternatives. Upstream producers came out at about 0.53—uncomfortably high—because so much of their business was tied to a handful of powerful hubs. When the same models layer in mutual downstream stakes—producers owning pieces of processing or manufacturing capacity—vulnerability falls sharply and measured influence surges; in one simulation, a producer’s influence index multiplied 88‑fold once those reciprocal ties were added.

The historical data affirm the models’ outcomes. Across Belt‑and‑Road lithium flows from 2000 to 2022, actors with modest geography but strong mutual links lost roughly 5% of their influence in disruptions, compared with 15–20% losses for players relying on headline position alone.

Zimbabwe: a spoke with hub potential

Zimbabwe’s recent experience is a textbook case of the risks of having geology with not-yet-established positioning. Exports of lithium ore to China increased roughly five‑fold by late 2023, backed by more than 300 million dollars of investment from firms like Huayou. On paper, this looked like the classic success story: rich deposits, rising volumes, with China on the buying side. Then 2025 arrived. Volumes climbed another 27%, yet revenues fell 11% to about 390 million dollars as spodumene prices sagged and a single‑market strategy bit back.

The country’s network profile mirrors that of a spoke: strong geological base, but trade ties overwhelmingly concentrated on one powerful hub. The way out is a shift that Zimbabwe seems to be developing capacity to make:

Transcending geology means building processing capacity that can handle multiple feed sources and sell into multiple markets, rather than serving as a single pipe to China. Locking in reciprocal partnerships—hosting foreign processing operations while also maintaining options with other international buyers. Developing enough technical sophistication to add value at several stages so there are positive reasons for flows to route through Zimbabwe, not just a lack of alternatives.

Current data suggest Zimbabwe has completed perhaps a fifth of that journey in a relatively short period. The country is precisely the kind of actor that can, with the right positioning, turn 15% of regional trade into more leverage than a rival shipping 40%, if those flows become strategically indispensable to others.

On being more than a dot on the strait; Lessons from Djibouti

Djibouti’s port tells a parallel story in a different commodity. The country sits by the Bab el‑Mandeb Strait, through which roughly 15% of global maritime traffic passes—a geographic inheritance that would tempt anyone to talk in chokepoint clichés. Yet the striking numbers are not the shipping maps but the throughput: Ethiopian containers have grown from about 176,000 in 2002 to 854,000 in 2014, to 3.4 million tonnes at a single terminal in 2024, up 12% year on year. This has largely stemmed from targeted investments in specialised infrastructure and reciprocal deals with operators such as DP World and Chinese logistics firms, creating trade lanes that run profitably in more than one direction. Djibouti has shifted from merely guarding a strait to operating as a logistics node that Ethiopian trade uses because it makes sense.

Today, roughly 95% of Ethiopia’s seaborne trade pays Djiboutian fees, outpacing peers relying heavily on geography.

Transposed back into lithium, the point is straightforward. A firm or country that sits astride several viable pathways through operational excellence and mutual partnerships can command influence that survives shocks. An actor whose importance rests purely on the absence of alternatives should be racing to build reasons—beyond location—for others to keep routing business its way.

Australia: the case of the ambitious spoke

Australia sits on the other side of the story: the archetypal upstream giant learning to play a more ambitious game. In 2022 it produced over half the world’s lithium, yet exported nearly all of it as raw spodumene, effectively handing the high‑margin chemical transformation to Chinese refiners. By 2026, those refiners’ internal networks were forecast to become so efficient that their processing capacity would outpace the expansion of mining itself.

This was spoke‑style vulnerability in its purest form: outstanding geology, but leverage captured elsewhere. The emerging response is more strategic. New Australian refining projects are not merely an extra step in the chain; they are attempts to plug directly into battery manufacturers and other end‑users, creating mutual ties with actors who themselves matter. Network models suggest this change in wiring pays off. When upstream actors add reciprocal relationships to end‑users, they weather cascade failures—system‑wide disruptions rippling through the network—around 10% better than peers stuck in one‑direction flows. In non‑technical terms: when Chinese refineries run into regulatory or capacity trouble, Australian refiners with direct relationships to battery makers keep earning while pure ore exporters wait for the phone to ring.

The board versus the game

Across cases, the pattern is clear. Quality of connections beats sheer volume of resources or enviable geography. The actors who regularly audit their network position, cultivate mutual, high‑value partnerships rather than one‑sided volume deals, and are willing to reposition themselves as the web evolves tend to outperform those who assume that deposits, ports, or straits will do the heavy lifting. Think of geology and geography as the board on which the game unfolds: the mines, the deposits, the straits. Positioning is the way you actually play—deciding which relationships to build, which dependencies to unwind, and where to insert yourself as a channel others cannot easily bypass. In a market where prices can swing 80% and new processing technologies redraw the map, it is not necessarily the player with the best starting square who wins, but the one who keeps rearranging their ties with the most strategic discipline.

*George Katito is CEO/Founder of Geostratagem