Race for lithium illustrates EU drive for ‘strategic’ raw materials

Workers clean a prototype of a Mercedes-Benz car before a laying of the foundation ceremony of the new ACCUMOTIVE battery factory in Kamenz, Germany, 22 May 2017. Daimler AG lays the foundation of a lithium-ion battery factory with an investment of around €500 million. [EPA/FILIP SINGER]

This article is part of our special report The global race for raw materials.

The European Union is accelerating plans to develop lithium mining and refining capacity on its territory as part of a concerted EU push to develop a strategic value chain for manufacturing electric car batteries inside Europe.

With the electrification of transport, the race to develop a complete battery manufacturing value chain in Europe is now underway. And despite a slow start, the EU is rapidly catching up.

One year ago, the European Commission launched a European Battery Alliance, bringing together automakers, chemical and engineering executives in a bid to compete with Asian and American manufacturers.

The objective is to build a whole value chain for the manufacturing of batteries in Europe, a strategy that came to the forefront earlier this year when the European Investment Bank (EIB) announced financing to build Europe’s largest battery factory, in Sweden.

In order to complete the value chain, Europe now wants to secure access to the raw materials needed to manufacture the latest generation of car batteries, relying on lithium-ion technology.

“We are working a lot on batteries and the discussions there focus on cobalt, lithium, nickel and copper,” said Maroš Šefčovič, the European Commission vice-president in charge of the energy union, one of the EU’s flagship projects.

Inside Europe, attention has focused on mapping out the raw materials available on European soil so they can be exploited in a sustainable way.

“There are new projects for production in Europe. Mines are opening or re-opening and there is prospection going on to open some new ones,” Šefčovič told EURACTIV in an interview.

Discussions at EU level include easing permitting procedures and ensuring coherence between different regulations, Šefčovič said, referring to discussions taking place with EU member states in a high-level group on raw materials.

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Refining capacity gap

The EU group also identified weaknesses, starting with a “gap” related to lithium refining capacity in Europe.

“We clearly have to cover this gap,” Šefčovič told EURACTIV. “We have very solid reserves of lithium in Portugal, in the Czech Republic and in the Nordic countries. But we do not have the refining ability. So even if we extract the lithium today, we have to send it to China for processing,” he pointed out, adding the issue needs addressing as a matter of priority.

“The demand for processed refined lithium will be quite big in Europe, so it makes sense to have lithium refining capacities here,” he argued.

Europe’s battery cell demand is projected to reach 200-gigawatt hours by 2025 – a market worth an estimated €250 billion annually, according to the European Commission.

Lithium-ion is the technology of choice for electric car batteries and will remain so for the next ten years at least, according to Eurobat, the association of European manufacturers of automotive, industrial and energy storage batteries.

The vice-president of the EU executive is now busy making plans to cover the lithium refining gap, saying the main companies involved in the supply chain will be invited to Brussels “before Christmas” to discuss how this can be done.

“We are ready to discuss not only the regulatory aspects of course but also financial assistance – be it under the Important Projects of Common European Interest (IPCEI) or under Public Private Partnerships with the European Investment Bank (EIB),” Šefčovič said.

“Strategic” raw materials

The race for lithium illustrates a wider EU push for raw materials that are expected to become increasingly strategic with the digitalisation of the economy and the transition to cleaner forms of energy.

Producing a 3-megawatt wind turbine requires 335 tonnes of steel, 4.7 tonnes of copper,  1,200 tonnes of concrete, 3 tonnes of aluminium, 2 tonnes of rare earth elements as well as zinc, Šefčovič pointed out, saying this was “really illustrative of the volume of raw materials you need for the green transition.”

As a result, developing mining activities in Europe has become “of strategic importance,” said the Commission vice-president.

“I really think that, when it comes to the issue of dependency, we could end up in a situation where raw materials become the new oil,” Šefčovič warned, saying Europeans have to be “very vigilant” that today’s dependency on imported oil and gas is not replaced by dependency on lithium, cobalt, copper and other raw materials that industries need for the green transition.

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Recyclability and reuse

Besides relaunching mining activity in Europe, the EU also intends to improve the recyclability of batteries so that the materials they contain can be more easily recovered.

This includes a review of the ten-year-old batteries directive and a push for standardisation in the way car batteries are designed so they can be more easily disassembled for recycling.

Umicore, a Brussels-based mining company involved in recycling and materials for rechargeable batteries, says the potential for smartphone recycling in Europe today is equivalent to producing about 4 million new batteries for electric cars.

“Globally, there are 2 billion mobile phones, tablets and consumer electronics that are sold and only 10% of them are being recovered,” said Guy Ethier, senior vice-president at Umicore. This means “tonnes of metals” are currently sitting “in the drawers of people” and are not being recovered, he told EURACTIV, saying Europe was no exception.

Regarding electric cars, Ethier said the business case for recycling will be obvious once the first generation of mass-produced electric vehicles reaches the end of their life cycles ten years from now. “There is a good business case for battery recovery,” Ethier said. “And we are willing and open to export our technology to other places in the world where there are end-of-life materials.”

The International Energy Agency expects numbers of electric vehicles on roads worldwide to be around 40 times higher in 2030 than in 2017, leading to a sharp rise in spent batteries becoming available for recycling.

And when car batteries reach the end of their lives, EU regulators believe they can still be reused for other applications before recycling – like smart homes, or for industrial storage.

Policy initiatives on battery recovery, reuse and recycling will be launched under the European Commission’s current mandate, “before autumn 2019,” Šefčovič said.

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“Africa-Europe Alliance”

The second pillar of the European discussion on batteries covers relations with regions supplying or handling the raw materials – mainly China and Africa.

And the challenges there are huge. Umicore’s Guy Ethier said the company was “very concerned” about “questionable” labour and environmental standards in some mining regions, citing cobalt in the Democratic Republic of Congo (DRC) and lithium in South America’s Atacama desert.

A survey by Amnesty International, published in November 2017, uncovered “major blind spots” in the supply chains of major electronics and car companies, including child labour and other human rights violations linked to cobalt mining in the DRC.

More than half of the world’s cobalt, which is a key component in lithium-ion batteries, comes from the DRC, and 20% of it is mined by hand in artisanal mines, said the Amnesty report, Time to Recharge.

The European Union is aware of those concerns but has so far failed to put in place effective policies to prevent human rights abuses in supply countries. Today, 50% of cobalt mines in the world are managed by China, the Commission says. And once they fall under Chinese control, labour and environmental standards are more difficult to enforce.

Now, the Commission says it wants to make “a strategic push” so that resources like cobalt are mined in a way that preserves the environment and benefits local communities.

“We want to use the new drive for a new EU-Africa partnership to promote sustainable mining and establish fair trade relations when it comes to raw materials,” Šefčovič said.

This is part of a new “partnership of equals” between Europe and Africa announced by Commission President Jean-Claude Juncker in his recent state of the union speech. The new partnership is based on a holistic approach to Europe’s relations with Africa, which includes €44 billion for investment projects with provisions on fair trade to ensure they benefit local communities.

It also means European companies operating in Africa “should be ready to pay taxes and play a role in the local economy to the benefit of African countries, bringing their know-how and investments in new energies,” Šefčovič said.

The EU’s stated objective is to offer an alternative to Chinese investors and take a bigger slice of mining activities in Africa, based on a long term approach.

“That is something I believe will be more and more appealing for African countries,” Šefčovič said. “Because with Europeans you know what you get – a transparent approach, companies that pay taxes and take care of the environment”.

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