Domestic lithium supply chains in the UK and the EU are a growing priority to support clean energy and electric vehicles.
As the world transitions to a low carbon future, increasing scrutiny is being applied to the supply of the raw materials needed for electric car batteries and their associated carbon footprint. Lithium-ion batteries are now widely accepted as the technology which will allow electric vehicles (EVs) to achieve widespread adoption, thus lowering the emissions of carbon dioxide and particulates; but where the raw materials of these batteries originate, and how much carbon is generated in assembling the component parts, is of increasing concern to governments and to investors.
For example, lithium mined in Chile or Australia must be shipped thousands of kilometres for further processing in China or Japan before being assembled into a battery. The battery then must then be shipped thousands of kilometres, for example to the UK and mainland Europe, before being assembled into a battery pack and ultimately into a vehicle. It is therefore no surprise that vehicle manufacturers and regulators are becoming increasingly aware that it is optimal to have a source of battery raw materials, such as lithium, within a short distance of the battery plant and to the assembly plant in order to minimise overall emissions.
Given increasing scrutiny regarding the provenance of raw materials, it is imperative that such manufacturers can identify the source of the materials that enter their supply chain due to concerns regarding certain materials, such as cobalt, which are produced using child labour in some African countries. In addition to concerns regarding the carbon footprint of the battery supply chain, the recent trade war between the US and China has raised the prospect of critical raw materials being ‘weaponised’ and used to hold other economies to ransom.
The visit to a rare earths production plant by China’s President Xi Jinping earlier this year served to highlight that China currently produces approximately 90% of certain metals which are essential elements in modern electric motors and wind turbines. A reminder of the importance of such materials was provided when China slashed export quotas of rare earth metals by 40% overnight in 2010. Security of supply has suddenly become a big issue and both the US, and the EU have commenced studies into potential domestic sources of metals which are vital to the technologies upon which we are increasingly reliant.
Vital for European car manufacturers to maintain market share
The EU, which recently stated that ‘the automotive industry is crucial for Europe’s prosperity’, estimates that the automotive sector provides direct and indirect jobs to 13.8 million Europeans, representing 6.1% of total EU employment and over 7% of EU GDP. It is therefore considered vital that European car manufacturers maintain market share and it is increasingly recognised that in order for this to happen the necessary supply chains and associated raw materials must be secured.
Concern regarding raw materials such as lithium, cobalt and ‘rare earth’ metals has caused many governments and manufacturers to reevaluate their previous policy of relying on ‘market forces’ given that, for example, Europe currently produces virtually no battery-grade lithium – a material described by Volkswagen, the world’s largest carmaker, as the ‘irreplaceable element of the electric future.’
Given the widespread move towards electric vehicles and batteries for the storage of renewable power, Europe cannot find itself totally reliant on imports of lithium and other ‘battery metals.’ The European Commission has said: ‘Batteries development and production is a strategic imperative for Europe in the context of the clean energy transition.’
The European Union and the European Commission have indicated their willingness to support and provide capital to develop lithium production in Europe; with Maros Sefcovic, Vice President of the European Commission, saying recently: “Unless we develop our own capacity, the EU will continue to be in great part dependent on foreign supplies.” The World Bank recently predicted that demand for lithium will rise by around 965% by 2050 which means that supply will have to rise significantly and that additional sources will need to be developed in order to dilute the influence of certain suppliers.
UK lithium supply chain innovation
The UK government is increasingly aware of such concerns and has recently awarded a grant of approximately £380,000 (€442,303.32) towards Li4UK, a project assessing the feasibility of securing a lithium supply chain for the UK. The project is funded via Innovate UK and consists of three consortium partners:
- Wardell Armstrong – a major UK based engineering and mining consultancy with mineral processing testwork facilities in Cornwall;
- Cornish Lithium – a highly innovative mineral exploration company based in Cornwall, UK using modern exploration techniques to look for lithium and other battery metals; and
- The Natural History Museum – provides world class geological and mineralogical characterisation services.
The consortium will address a critical missing link in the UK’s battery material supply chain by identifying the requisite processing technologies and possible sources of raw materials needed to develop a sustainable domestic lithium supply chain. When announcing the grant in June 2019, UK Business and Energy Secretary, Greg Clark said: “We will continue to invest in future car manufacturing, batteries and electrification infrastructure through our modern Industrial Strategy and today’s winners will be crucial in ensuring that the UK leads the world in the global transition to a low carbon economy – one of the greatest industrial opportunities of our time.”
With global concerns growing over the carbon footprint of the transport and energy sectors, the European Investment Bank (EIB) recently approved a €350m loan for Swedish battery firm Northvolt to build the EU’s first lithium-ion battery gigafactory. Northvolt, which states that its mission is to build the world’s greenest lithium-ion battery cells, is building the factory in Northern Sweden using 100% renewable energy sources. When announcing the loan approval, EIB Vice President Andrew McDowell said: “The development of a competitive and green battery value chain within Europe can not only cut greenhouse gas emissions by decarbonising power generation and transport, but can also help protect millions of well paid jobs in European industries in the face of increasing global competition.”
In order to meet the European Commission’s goal of a climate neutral Europe by 2050 it is therefore considered necessary for Europe to refocus on the possibility of developing domestic sources of essential raw materials such as lithium, which are vital enablers of the move towards EVs and power storage. This will necessitate funding at a government level for exploration and for the development of new sources of battery metals which are themselves capable of being mined in an environmentally friendly way. Increasing scrutiny by government and by investors worldwide will necessitate a changed – and increasingly domestic – approach to natural resources as the world moves towards a low-carbon future.
About Cornish Lithium
Cornish Lithium is a highly innovative mineral exploration and development company focused on the environmentally sustainable extraction of lithium from geothermal brines in the historic mining district of Cornwall, UK. The company has secured agreements with the owners of mineral rights over a large area of the County and is using modern technology to reevaluate the region for lithium and other vital technology metals such as tin, copper and cobalt. A secure domestic supply of such metals is considered vital to the industrial strategy of the UK as it moves towards the production of electric vehicles.
Jeremy Wrathall
Cornish Lithium Ltd
+44 (0)203 327 7000 Ext. 1004
+44 (0)7712776100
