View from Brussels: the EU makes a lithium rod for its back

Electric vehicles, grid batteries and a host of other technologies crucial to Europe’s energy transition goals all rely on lithium. The EU may be about to complicate its life by classifying the raw material as dangerous for human health.

The current generation of battery technology requires lithium, so as electric vehicle sales steadily increase and as more renewable energy comes online – requiring storage – demand will only increase.

In 2020, the European Union added lithium to its list of critical raw materials, which is reserved for materials essential for EU policy purposes or facing supply shortages. In the case of lithium, it was the first criteria that ensured its inclusion.

Brussels has big plans to grab a slice of the global battery production market, increasing both the manufacturing of the end product and the mining and refining of raw materials.

Countries like France and Germany have started raising billions of euros to build gigafactories as demand for vehicles in particular increases, while new efforts are underway to speed up the recycling and recovery of parts from battery.

But lithium could soon face similar hurdles that materials like cobalt and lead have faced over the years: negotiating tougher health and safety rules if the EU decides to list it on the list of hazardous substances.

According to a plan drawn up by the European Chemicals Agency, lithium could be subject to stricter regulation, based on studies suggesting a link between exposure and developmental problems, as well as reduced fertility.

The process is by no means complete. Governments, legislators and stakeholders will all want to have their say and no final decision is expected before the end of the year at the earliest. History suggests the process could drag on even longer.

Industry groups insist that there is only a tenuous link between the health factors cited by the CEA and lithium exposure. Many add that if the plan comes to fruition, it could be a fatal blow to Europe’s still-nascent energy transition ambitions.

“Europe is catching up with China, which is already more than a decade ahead, now controlling most of the world’s processing of lithium and other battery metals. Europe has a narrowing window of opportunity for attract the necessary investment, and lithium is a material central to our success,” read a statement from key industry players.

China may be a world leader in battery production, but in terms of lithium mining, it lags far behind Latin America and Australia. Chile leads the ranking with more than 9 million tons of reserves.

EU strategies aimed at reducing dependence on other countries and preventing raw materials from becoming ‘the new oil’ often tout the potential of advanced geological studies to identify reserves within of the borders of the Union.

There is untapped potential in France, Austria and Scandinavia, while the only existing European mines in Portugal could be mined more intensively, according to energy experts. But mining may not be the right starting point for the EU.

In May, Tesla boss Elon Musk met with block industry czar Thierry Breton to discuss everything from social media regulations to electric mobility and space exploration. Their conversation also focused on lithium refining.

Musk insisted in this conversation – which has now been revealed thanks to an access to information request – that dependence on China must be avoided and that refining capacities must be built elsewhere.

Tesla sources its lithium from Australia, but still relies on Chinese industry to turn it into a material that can be used in its batteries.

“Refining capabilities [built] at the national level or in like-minded countries is essential given the risk of a country having an immovable piece,” reads the summary of the Musk-Breton meeting.

Putting lithium on the hazardous materials list could jeopardize the massive investments needed to make these refining facilities a reality, so the EU may have to be careful not to shoot itself in the foot.

Albemarle, a US-based company, has already indicated that it could close a factory in northern Germany if ECA’s plan is accepted by the European Commission, insisting that the costs and formalities administrative would be too great.

Brussels could again make use of a special instrument known as Important Projects of Common European Interest (IPCEI), which allows EU governments to band together and invest money in strategic projects, without being subject to the strictest state aid rules.

The existing IPCEIs in the production of batteries and semiconductors are already starting to bear fruit and others are planned in these sectors and in other areas such as hydrogen. Refining lithium would also likely tick all the boxes necessary to qualify.

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