Lithium costs could rise sharply
A source within the EU confirmed the news to Reuters. It is understood that EHCA recommends the EU to introduce a more stringent lithium control framework, in the treatment of lithium, packaging, storage and other aspects of the control.
The EU is scheduled to give its assessment of the proposal by the end of this year or early next year. It is widely believed that once the proposal is approved, the cost of lithium supply in the EU will rise significantly.
Industry research institutions farce clients in the energy analysis, points out that although the lithium raw materials listed as "harmful" proposal will not fundamentally prohibited to use lithium salt, but likely of the eu lithium battery supply chain in mining, processing, electrode production and processing of the four main link adversely affected, and administrative obstacles, risk management and limit will be for fledgling lithium electricity industry in Europe, And drive up the cost of lithium battery development.
It is reported that as soon as the news came out, multinational lithium producer Arpo said that it "may close its lithium production plant in Germany as a result". Scott Tozier, Chief financial officer of Arpo, stressed that if electric vehicle-related metals were classified as "hazardous", Arpo would not be able to import key lithium raw materials such as lithium chloride, which would also put operations at all lithium production plants in EU countries in a difficult situation. The Langelsheim lithium production plant in Germany employs more than 600 people and accounts for about 8% of the company's total lithium sales.
Damage to the EU lithium industry
In the face of surging demand, the European Commission has predicted that the demand for lithium raw materials in the EU is expected to be more than 18 times that in 2020 by 2030, and more than 60 times that in 2050. At the same time, the EU is highly dependent on imports of lithium, with Argentina, Chile and other South American countries being major sources of the mineral. In order to improve the degree of autonomy in the production of lithium raw materials, in the past two years, the EU has significantly accelerated the localization of the upstream and downstream industrial chain of electric vehicles. The most important means is to increase the local production of lithium salt and establish a complete lithium electric industry chain. So far, Portugal, Germany and other EU member states have laid out lithium production, France also recently announced that it will accelerate the progress of local lithium resources exploration.
However, with the exposure of the proposal, the eu's local lithium industry may be in trouble. Tozier said classifying lithium as "hazardous" would have "serious implications for the location of the BATTERY industry chain in the EU", forcing companies to locate production in non-EU countries and forcing the EU to import more lithium. "At the same time, battery recycling, electrode manufacturing and other aspects of the future may be gradually moved out of the EU, even the LOCAL production of lithium raw materials may need to be exported to other countries for processing."
The European Union is one of the world's major lithium markets, and regulatory changes will create uncertainty for the industry and delay major investment decisions in the future, said James Ley, senior vice president at Monitor Advisors Energy.
Could jeopardise the EU's net zero emissions target
According to a plan published by the European Union, the eu is expected to increase regional production of battery-grade lithium carbonate to more than 8.3% of global production by 2025. But lithium production in the European Union is currently negligible, according to Data from Monitor Energy, and the target could be missed even if the EU does not end up listing lithium as a 'hazardous' product.
Bernd Schaefer, chief executive of EIT Raw Materials, an EU-funded Raw Materials development agency, said the EU needed to spend at least 100 to 150 billion euros on Raw Materials to address the challenges arising from electrification, but only 2 billion euros had been launched so far. Support the development of local rare earth and lithium mines.
In addition, The protracted approval process and fierce opposition from local communities are now one of the main obstacles to the development of new mining projects in the European Union, according to ReZ-Energy. According to James Ley, if the Commission does eventually change the classification of lithium, it will not only endanger the lithium industry, but could also undermine the EU's energy security and jeopardise its net zero emissions target.
More significantly, global lithium prices have continued to rise over the past two years, and mining companies are accelerating their search for new sources of lithium around the world. Industry estimates show that lithium reserves in the EU region are about 11.28 million tons of lithium carbonate equivalent, mainly in Portugal, Austria, the Czech Republic and other countries, but as the EU continues to tighten regulations on lithium production, the global shortage of lithium resources may continue to worsen.
