28.6 C
Belgrade
Supported byspot_img
spot_img

Battery-grade lithium production to start in Germany

Member of Europium Groupspot_img
Supported byspot_img

It has been called the new gold rush – a rush to catch up with China in producing and refining the materials needed in everything from computers to cars: but has it come too late to save Europe’s car industry?

Deep inside a former East German town lie the first fruits of the EU’s grand plan to “de-risk” and wean itself off dependency on imports for the green revolution. In Bitterfeld-Wolfen, 140km south-west of Berlin, an Amsterdam-listed company is scrambling to complete construction of a vast factory that will be the first in Europe to deliver battery-grade lithium.

There is now a race across Europe to both mine the silver-white soft metal and manufacture its refined form, lithium hydroxide – the key ingredient in the batteries that power electric cars, robot vacuum cleaners and mobile phones.

Supported by

“Everybody wants to get access to lithium. This is maybe why they call it the white gold, because it is like a gold rush,” says Stefan Scherer, chief executive of AMG Lithium. “It’s this atmosphere: ‘Wow, I have to be in this game’. There is almost no company dealing with raw materials that is not looking into lithium. It’s just too attractive.”

The EU is in a hurry, having come to the late realisation that it is over-reliant on China for a host of critical raw materials, 16 of which are now listed by Brussels as priorities in a new industrial strategy designed to protect the bloc’s economy and achieve the ambitious goal of reducing net greenhouse gas emissions by at least 55% by 2030.

The dependency is also unnerving German and other European car manufacturers, whose home markets are now threatened by good-quality Chinese cars and China’s control of the processing of lithium.

Concern is so great that the European Commission president, Ursula von der Leyen, has launched an anti-subsidy investigation into Chinese imports, amid fears that big manufacturers including Volkswagen and BMW will have trouble matching the supply of electric cars from China.

But lithium does not, in the main, come from China, so how has Beijing achieved such a commanding position? Was Europe asleep at the wheel?

Lithium supplies are dominated by five countries, with the bulk of the mineral mined in Australia and Chile, but it is China that has taken the raw material and become the dominant supplier of refined lithium.

“They are now the global hub. This gives them economic leverage – or, to put it more bluntly, the means of economic coercion,” says one EU source.

The seeds of the EU’s dependency on China were sown in the 1980s after the oil crisis, when then Chinese leader Deng Xiaoping observed: “The Middle East has oil. We have rare earths.”

Rare-earth materials were once found in abundance in the US, Europe and Japan, but investors in these regions retreated from mining, which was seen as a dirty and expensive industry, handing a huge market to China, which set about buying the world’s stock to become the global hub it is today.

The Russian invasion of Ukraine has brought that lopsided trade relationship into sharper focus.

“Lithium and rare earths are already replacing gas and oil at the heart of our economy. By 2030, our demand for those rare earth metals will increase fivefold,” Von der Leyen warned last year in her 2022 state of the union address. “We have to avoid falling into the same dependence as with oil and gas.”

So the EU has set about pushing through efforts to scale up green technologies with the Critical Raw Materials Act, which it passed earlier this year “in record time”, according to Peter Handley, head of the raw materials unit in the commission.

It relaxes state aid rules to compete with the US’s Inflation Reduction Act, and raises targets for extraction within Europe, and for recycling of products, such as phones, which contain lithium. If all goes to plan, it should become a regulation in the EU this month. “It sets the level of ambition,” says Handley.

Before a trip to Latin America to tie down deals on raw material production, Von der Leyen told reporters that the EU had “a 97% dependency where lithium is concerned on China”.

Back in Bitterfeld, Scherer surveys the vast plant that is going to help change that. He points to 20-metre- high metal vats for lithium solutions, drying machines that produce a substance similar to sugar crystals – just one of the processes that create the final refined product before it can be shipped to clients eager for the first batches of EU-made lithium.

AMG Lithium expects to be operational by the end of year and has orders stretching into 2026, with demand for fresh lithium salt in Europe forecast to rise to 500,000 tonnes a year by 2030.

“We plan to produce 100,000 [tonnes] of that,” says Scherer –enough to provide the active charging ingredient in 2.5m cars.

Scherer says it is “absolutely” important that the EU reduce its dependency on China for refined raw materials but is decidedly of the view that it should not cut links fully.

“You can’t tell a business partner: ‘Oh, you do the little-value small stuff and we will do the rest’,” he says.

The Chinese manufacturers already have a 10-year headstart on the EU’s motor industry and “now they are building cars – not bad cars – and they want to sell them as well as the battery cells,” he says. “You have to live with this fact.”

Catching up will be a long and expensive process. To get from opening a mine to producing battery-grade lithium can take seven years. “To open up a mine and build a fully fledged production chain – that’s maybe $750m,” says Scherer. “The thing with chemistry is that it is a capital-intensive industry.”

So is the EU simply too late to stop China overwhelming the domestic car industry?

Chinese conglomerates such as BYD (Build Your Dreams) started making electric batteries as far back as 1995 and are now building their own electric cars.

“I see the German car industry in decline,” says an EU industry source. “It is fading away because of the inability of managers to do the right things. It is such a sad story. It’s a little bit like the dinosaurs. They have lost the ability to innovate.”

Notably, China overtook Turkey to become the EU’s top country of origin for car imports across all fuel types last year. European brands still account for 70% of the bloc’s battery-electric car market, but China’s share has risen from 0.5% in 2019 to 4% in 2022 at a time when all-electric models have exceeded 20% of total car sales in the EU for the first time.

And China is already driving prices down. Having launched three electric cars in Europe last autumn, BYD has now added two more to its range, with prices for the smaller model starting at €29,990 (£25,632) and going up to €36,740 – significantly below the cost of similar-size European electric vehicles (EVs), which start at €35,000 or more.

But Sigrid de Vries, director general of the European Automobile Manufacturers’ Association, says the industry needs more than just a home supply of lithium to fight back. Like many, she thinks the quickest way to transition from petrol and diesel is to offer financial incentives to users.

“There is no question that affordability is a stumbling block for European electric vehicle uptake,” says De Vries.

“Both the US and China are also more ambitious than most EU member states in their purchase incentive and tax benefit schemes, which reduce EV costs for consumers.”

She also argues that because of the rules-of-origin regime in the Brexit deal, tariffs will hit the industry hard unless they are suspended.

“The UK market – the EU’s top destination for car exports – provides a glaring example of where cost-competitive Chinese EVs could significantly dent European automakers’ market share,” she says.

She adds: “If the current rules of origin on EU-UK vehicle trade are not extended by three years, the loss of market share to Chinese-made EV imports could cost European manufacturers €4.3bn and cut EU-made EV production by up to 480,000 units.”

To add to the Brexit deal problems, carmakers also have a fight on their hands to get political support against Chinese rivals, with EU internal market commissioner Thierry Breton warning on Friday that the EU’s job is not to favour one part of an industry over another.

 

Source: The Guardian

Supported byElevatePR Digital

Related News

Euro Manganese advances with successful commissioning of high-purity manganese facility

Euro Manganese Inc. has successfully completed the commissioning of its high-purity manganese Demonstration Plant at the Chvaletice Manganese Project in the Czech Republic. This...

Rio Tinto Assures on 2500 Pages – There is a Solution for Every Danger

Rio Tinto executed a move announced six months ago – they published drafts of environmental impact studies on how harmful the lithium mine in...

Critical Materials Act: Europe’s strategy for securing green technology supply chains

In May 2024, the EU Critical Raw Materials Act (CRMA) came into force, setting ambitious benchmarks for the domestic production and diversification of strategic...

Critical materials and the path to resilience: Europe’s quest for technological independence

The sustainability and resilience of modern economies hinge critically on the availability and management of key raw materials, such as lithium, cobalt and nickel....
Supported by
Supported by
Supported by
error: Content is protected !!