Development of lithium production is progressing slowly in Europe

Zurich, Vienna, Madrid, Stockholm, Rome The price of lithium, the key ingredient in lithium-ion batteries for electric cars, has been skyrocketing for months. According to data from the analysis company Benchmark Minerals, the price has increased almost tenfold within two years. The raw material is currently so scarce that even cost-intensive mining projects in Europe would be worthwhile.

Nevertheless, the expansion of lithium production on the continent is making little progress: in Serbia, the mining company Rio Tinto recently canceled an investment of two billion euros in a mining project – the protests of the local population were too strong. Across Europe, companies are exploring lithium mining, from Finland to Portugal. But many countries have similar problems.

George Miller, lithium expert at Benchmark Minerals, therefore does not believe that Europe will become an important producer of the metal: “The legal framework is not particularly mining-friendly,” says Miller. Therefore too little is invested. He estimates that by 2025 Europe will have a market share of little more than 2 percent of global lithium production. “And only if all planned projects are successful.”

It doesn’t look like that: The EU Commission also wants to improve the framework conditions for lithium production. But politicians like EU parliamentarian Hildegard Bentele (CDU) complain of a “not in my backyard” attitude: nobody wants such projects at home. In the following, the Handelsblatt gives an overview of the most important projects in Europe – and why they are being delayed.

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Germany: change of ownership and short-seller attacks

Two companies in this country have ambitious plans for lithium production, Zinnwald Lithium and Vulcan Energy. Years ago, the bankrupt solar module manufacturer Solarworld wanted to dig for ore in Zinnwald in the Ore Mountains.

The start of production was originally planned for 2021. However, after a series of changes of ownership and restructuring, this schedule fell through. The current owner has just raised new capital to complete a bankable feasibility study.

Mining shaft in the Ore Mountains

Mining projects destroy nature, so resistance is to be expected.

(Photo: Getty Images)

The company recently announced that additional funds are needed before production can start. In the immediate vicinity on the Czech side, the company CEZ, a partly state-owned energy company from the Czech Republic, is also pursuing a lithium mining project.

Vulcan Energy wants to use the geothermal deposits in the Rheingraben between Frankfurt and Basel to extract lithium from the hot thermal brine. The company is working on an extraction process that will extract the metal without emitting greenhouse gases and at the same time generate energy from geothermal energy. To this end, the company recently took over an existing geothermal plant, and more are to be built.

But a short seller raised doubts about the technology a few months ago. In the confrontation with the short seller, Vulcan was able to win a stage. But the local population also has reservations about the planned geothermal plants.

Finland: Delays despite prominent donors

“Europe’s largest lithium mine” – this is how the Finnish company Keliber describes its project in Kaustby in northern Finland. The company plans to start construction there this summer. The start of production is planned for 2024. Keliber is targeting annual production of approximately 15,000 tonnes of lithium hydroxide. According to the company’s calculations, that would be enough for 200,000 car batteries per year.

The project has prominent financiers: the largest investor is the South African mining company Sibanye-Stillwater, which holds 26.6 percent of the share capital. Sibanye-Stillwater is one of the world’s largest producers of platinum, palladium and gold and employs around 80,000 people.

Extremadura

In Spain, large lithium deposits are suspected, especially in the poor region of Extremadura.

(Photo: imago images/Lagencia)

However, the project has already been delayed several times because the necessary approval procedures were not completed in time. However, the company now expects construction to start in the summer of 2022. The advantage of the project: the area is sparsely populated and there have been no major protests from the local population.

Portugal: Politics promises profits to the population

In Portugal, the government has just approved test drilling for lithium in six areas: “Only then can we say how high the deposits are and whether their extraction makes economic sense,” says João Galamba, Portuguese State Secretary for Energy, the Handelsblatt.

But even before the majority of the licenses have been decided, residents in numerous regions are protesting against lithium mining. Galamba criticizes “misinformation and propaganda”. Portugal has 55 active mines for quartz and feldspar, which is used for ceramic production. They are in the same areas that are now being investigated for lithium deposits, and the mining process for the minerals is identical. The opposition of the communities against lithium is therefore “a bit strange”.

To accommodate local residents, the Portuguese government even changed the mining law. The profits from mining, which until now have only accrued to the state, are now to be shared up to half with the local population.

The largest deposit in the country is believed to be in the community of Covas do Barroso: the sole concession there is held by the mining company Savannah Ressorces, which is listed on the London Stock Exchange. Savannah plans to mine 175,000 tons of the lithium mineral spodumene annually at Covas do Barroso. However, the municipality has filed a lawsuit against the project – a decision is still pending.

Spain: “We will never build a mine”

In Spain, large lithium deposits are suspected, especially in the poor region of Extremadura. The deposits near Cáceres are said to be sufficient to build ten million electric cars. The company responsible for mining Tecnología Extremeña del Litio, which is 75 percent owned by the Australian-listed Infinity Lithium group and 25 percent by a subsidiary of the Spanish construction group Sacyr, is advertising this.

But the project has so far failed due to resistance from the regional government. In 2016, she gave the company permission to drill test holes in the valley of San José Valdeflórez just outside of Cáceres. But after protests from residents, she refused a second permit for test drilling at another location last spring.

Demonstrations against mine law in Portugal

The resistance of the population in ore-rich regions is growing across Europe.

(Photo: Corbis News/Getty Images)

Infinity Lithium’s share price then collapsed, and the shares were suspended from trading for weeks. Infinity Lithium appealed the decision to court, a verdict is still pending. For the mayor of Cáceres, Luis Luis Salaya, however, the matter is closed: “We will never build a lithium mine,” he said.

Austria: escalating costs

If things had gone according to the plans of European Lithium, lithium would have been mined in Austria since 2016. But there have always been delays, for example because of a conflict with a landowner. No sooner had this been cleaned up than the corona pandemic intervened. This prevented foreign mining specialists from traveling to Austria for preparatory work.

Dietrich Wanke, the German boss of the company listed on the Sidney stock exchange, now expects lithium to be mined at the wine level in the state of Carinthia in early 2025. European Lithium has received 54 exploration licenses and eleven mining licenses from the State of Austria, which include the right to mine lithium.

The company intends to complete the feasibility study by the summer. However, the uncertainties have recently increased again. On the wine level, European Lithium must create a complete mine. “The costs for this are currently escalating,” says Wanke.

From today’s perspective, European Lithium, which has so far been an exploration-only company, will invest 450 million euros in production. The Wine Plains deposit contains 12.9 million tons of lithium-bearing rock, according to the Company. European Lithium wants to use it to produce 10,000 tons of battery-grade lithium per year. There is already a pilot facility for this in Germany, as Wanke says.

Italy: Skeptical Church

Campagnano di Roma is about 30 kilometers outside of Rome. 12,000 people live in the green hilly landscape, horse breeders and olive farmers have settled in the valley. Here, of all places, in this sleepy valley, a precious treasure slumbers: at a depth of more than 1,300 meters there is said to be a huge lithium deposit, exactly how big is still unclear.

The Lazio region has given the exploration company Vulcan Energy, which is also active in Germany, a research permit for an area of ​​11.5 square kilometers. The company now has around a year and a half to check whether commercial lithium mining is worthwhile here. It would be the first large lithium deposit in Italy.

At least that’s the assumption at Vulcan Energy. During geothermal drilling in the 1970s, which the state energy supplier Enel carried out, a lithium content of 350 to 380 milligrams per liter was found – a very high concentration.

If mining actually occurs, it could represent a “source of strategic, sustainable lithium in Italy for the European battery and automotive markets,” according to Vulcan Energy. They will “work with local partners” to “more precisely determine the potential of the area”.

In the red-washed town hall of Campagnano, Vulcan Energy has not yet reported. Mayor Alessio Nisi tried to reach someone through the company’s website – without success. “We are ready for a meeting, we have no prejudices,” emphasizes the 39-year-old.

“We ask ourselves whether there is a safety guarantee for possible environmental damage, how safe the drinking water would then be?” says Nisi. Despite all the skepticism, the lithium deposit could also become a great opportunity for the heavily indebted community.

More: The struggle for the battery – More and more car manufacturers are stocking up on battery metals.

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