At a glance If Europe wants to build a value chain for batteries, lithium refineries are an important part. So far, almost all industrialised nations are dependent on China for the processing of the raw material. That, though, is increasingly changing. Let us take a closer look. What is happening with Europe’s reshoring of lithium refineries?

There are plans to extract lithium in Spain, Portugal, Serbia or on the Upper Rhine. But to process the material into batteries for electric cars, it has to be refined in lithium refineries. It is precisely this gap in the value chain that needs to be closed.

Until now, lithium and other raw materials have mostly been shipped to China because they cannot be processed in South America, Australia or Europe. Only the intermediate products are then delivered to the battery factories (overview article here) in Poland, Hungary, Germany, or France.

But that is changing. “The giga-factories for the production of lithium-ion cells are dragging down the upstream steps”, says Matthias Buchert, head of resources and mobility at the Öko-Institut in Darmstadt. By this he means the production of anode and cathode material and its preliminary stages. What is in it for you? The requirements are particularly high for electricity storage systems. Battery-grade lithium is much purer than industrial-grade lithium. “Very clean materials are necessary, otherwise the cells age more quickly”, says Buchert in an interview with German media.

For example, the Dutch battery manufacturer AGM produces industrial-grade lithium in Brazil, but refines it to battery quality in Bitterfeld in Saxony-Anhalt. The company Rock Tech wants to produce lithium hydroxide in Guben in Brandenburg from 2025. Vulcan Energy plans to refine the lithium extracted on the Upper Rhine in Frankfurt-Hoechst. In addition, there is now a cooperation with the multinational car company Stellantis, which envisages a refinery in an old Opel plant in Rüsselsheim. It fits into the picture that Umicore has been producing cathodes in Poland since the end of 2022. These were previously produced in South Korea and China. “These are investments in at least the double-digit millions in each case”, says Buchert. “That's not something any industry does that is uncertain about the path”.

The raw materials expert is thus reacting to recently expressed doubts as to whether the departure from the internal combustion engine and the turn towards purely battery-electric mobility is a mistake.

For Buchert, on the other hand, there is no question that this is the right path. In his view, it is important that raw material extraction and processing also follow suit with the gigafactories, as is planned in Finland, for example, where all stages are to be located.

For him, lithium refineries are the oil refineries of the future. The fact that China focused on e-mobility - for buses, for example - as well as batteries and processing of raw materials very early on was strategically smart, he says. And with its “breathtaking speed”, the Middle Kingdom has quickly overtaken Japan and Korea.

After all, these two countries have a strong electronics industry and thus know-how in processing materials like lithium. This was lacking in Chile and Australia, which produce the metal in large quantities. But to process it, you need skilled workers, capital and infrastructure. Burchert trusts Chile to take this step, but not the producing country Bolivia. Projects are also expected in the US, Canada, Brazil, and India.

What happens next?

Australia is already trying to build lithium refineries. Moreover, this is politically desirable. The relationship between Australia and China has been tense for years, and Beijing’s threatening gestures towards Taiwan have not improved the situation. Indonesia also produces nickel sulphate for batteries and wants to become an important supplier for the world market.

In Europe, the establishment of battery factories is being promoted with billions of euros, for example through the IPCEI (Important Projects of Common European Interest) projects. This indicates that EU and national politicians have now also recognised how important the extraction and processing of raw materials are. Best wishes,   The Polis Team in London