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8/10/2020 All aboard Europe's lithium bandwagon
Companies Mining Lithium
All aboard Europe's lithium bandwagon
Hans
Hans
Hansvan
van
vanLeeuwen
Leeuwen
Leeuwen Europe correspondent
Aug 9, 2020 – 11.25pm Save Share
London | A gang of Perth mining juniors is clambering aboard Europe’s lithium
bandwagon, shrugging off the global price doldrums and betting that European
governments and car makers will deliver an electric vehicle and battery bonanza.
The fundamentals for a European lithium boom seem in place. Coronavirus has
put barely a dent in the European car makers’ sales of, and ambitions for, electric
vehicles - and soon they will need more battery-ready lithium than the world can
supply.
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Rolling them out: Electric cars ready to leave VW's German plant. Getty
Meanwhile, the pandemic has steeled the Continent’s resolve to shuck off its
dependence on China for lithium supplies. And that's revved up the European
Union's drive to support mines and processing plants - the missing links in a fully
domestic supply chain.
ASX-listed Perth-based players such as European Metals Holdings, Vulcan
Vulcan
VulcanEnergy
Energy
Energy
Resources
Resources,
Resources European Lithium and Infinity Lithium are all hoping to get lithium
mining and processing projects shovel-ready within the next few years – and EU
taxpayer money is coming to the party.
“Europe is the place where lithium demand is going to grow the fastest of
anywhere in the world, and it has no domestic supply whatsoever,” says EMH
executive chairman Keith Coughlan. “The supply-demand equation is as simple as
that.”
RELATED QUOTES
EMH $0.30 0.00
1 year 1 day
0.50
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Sep 19 Dec 19 Mar 20 Jun 20
Updated: Aug 10, 2020 – 7.13am. Data is 20 mins delayed.
View EMH related articles
EUR $0.04 0.00
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Almost nobody has been putting money into new lithium projects – the price is just
too low, having plunged between 50 and 60 per cent in the past two years. But
Europe is the exception, and the honeypot.
The numbers tell the story. “Volkswagen alone will need 125,000 tonnes of lithium
carbonate equivalent by 2025 – that’s 40 per cent of the world lithium supply,”
Coughlan says.
S&P Global Market Intelligence expects global lithium demand to increase by 91
per cent from 2019 to 2024, reaching 536,000 metric tonnes of lithium carbonate
equivalent.
Electric vehicles are expected to account for nearly three-quarters of that demand
increase. Global passenger electric vehicle sales are expected to rise to 6.2 million
units in 2024, about three times higher than in 2019.
Market watchers have focused on this year's sales
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America but the EU has quietly gone the other way: there was a 69 per cent year-
on-year surge in European passenger electric vehicle registrations in the first five
months.
With France and Germany trowelling on the subsidies for electric vehicle
producers and buyers, S&P reckons sales growth could hit 45 per cent during 2020,
even in the midst of the massive pandemic-led economic contraction.
And that means the car makers are scrambling for batteries – causing a boom in
the European battery industry. Advertisement
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“The most expensive part of the electric vehicle is the battery pack, and 90 per cent
of those are coming from Asia – Japan, South Korea, China. Now, lithium battery
plants are being built pretty much everywhere in Europe,” says Ryan Parkin, CEO of
Infinity Lithium.
Capacity is mushrooming in Britain, Sweden, France, Poland and Germany. The
European Commission reckons the bloc's output will vault that of both the US and
non-Chinese Asia by 2024, for a 15 per cent share of world production.
“Many of the projects and facilities are not operating commercially yet, but are
likely to be fully operational within five years,” says IHS senior market analyst
Lukasz Bednarski.
Vulcan CEO Francis Whelan says Europe could be producing more than 500
gigawatt hours of lithium ion battery cells by 2029, needing more than 500,000
tonnes of battery-quality lithium hydroxide.
"That is greater than the entire global market for all lithium chemicals today,
which is about 350,000 tonnes. And Europe has zero domestic supply,” he says.
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The thing is, there’s plenty of lithium in the ground all across Europe – and now the
Australians are coming to help the Europeans get it out. And they also want to
convert it into battery-grade lithium, cutting out the processing superpower, China.
EMH is building a hard-rock lithium extraction and processing plant in the Czech
Republic, and wants to be in the construction phase by next year, hoping to churn
out at least 25,000 tonnes of lithium hydroxide a year.
Infinity Lithium has a hard-rock extraction project in Spain, which is looking to
start processing in 2023 and is aiming for 15,000 tonnes of lithium hydroxide a year.
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Vulcan wants to use geothermal energy to extract lithium hydroxide from brine in
southern Germany. Its untested process is a little further behind, but could be up
and running by 2024.
European Lithium has a hard-rock project in Austria that hopes to produce up to
10,000 tonnes of lithium hydroxide annually by 2022, although its most recent
update said COVID-19 had slowed progress. Perth mining player Tony Sage is the
non-executive chairman.
Savannah Resources has a hard-rock resource in Portugal, and is looking to have
the spodumene concentrate converted in China. The company is London-listed but
both CEO David Archer and technical director Dale Ferguson are Australian.
Even if all these players pull it off within the next five years, that would potentially
satisfy only the tip of the anticipated iceberg of European demand.
“If you have three European projects up and running in 10 years time, they’ll still
only be supplying 10 per cent of that demand, although they should have the ability
to scale up,” Parkin says.
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Some of the companies, notably Vulcan and Infinity, have had their share price pick
up since June. Many are now courting the European investor base: their shares
trade in London or Frankfurt, and Infinity is even contemplating a possible listing
in Madrid.
Part of this is that the companies need to look and feel a bit European if they are
going to tap the EU funds that are being siphoned into building this supply chain.
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“To secure money from the EU, the due diligence has been a long and very strict
process, there are a lot of boxes to tick. Some projects have been rejected," says
Parkin.
"You also need to show you’re involved in technology innovation. You have to show
you’re doing things differently."
That also means doing things the green way, which is becoming de rigueur in
Europe.
“It’s not enough to have a big lithium resource, you have to prove you can convert
the feedstock in a greener way," says Parkin.
"We have EU support because we have modified our process enough to be
sustainable and green. We’re using better reagents and less transport, and
producing less and benign waste, so that continual replanting of tailings areas is
proposed."
Coughlan agrees: “We won’t get EU support if we’re not a good green corporate
citizen. We can’t sell to someone like Volkswagen if we don’t have good green
credentials.
“Our hard-rock is not spodumene, it’s different, it’s not as energy-intensive to
extract lithium from it. The roast is a lot lower temperature, we don’t use sulfuric
acid, our reagents are benign and recyclable.”
Of course, the Australian players will be talking up their prospects. But even those
sitting on the sidelines seem to think there's something in all this.
"Lithium prices have been falling for almost two years now, which is hindering
supply, hindering expansions, hindering investments into new projects," says
Jacqueline Holman, senior pricing specialist at S&P Global Platts.
"If there isn't any investment now, then there’s a huge question mark over where
lithium is going to come from when all this European demand revs up."
If the Aussies are right, the answer to that question lies in Europe itself.
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Hans
Hans
Hansvan
van
vanLeeuwen
Leeuwen
Leeuwen covers British and European politics, economics and business from
London. He has worked as a reporter, editor and policy adviser in Sydney, Canberra, Hanoi and
London. Connect with Hans on Twitter
Twitter.
Twitter Email Hans at hans.vanleeuwen@afr.com
hans.vanleeuwen@afr.com
hans.vanleeuwen@afr.com
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