Peak Power | SPAC Feed

Peak Power | SPAC Feed

Time Stamp: September 10, 2023 4:19 PM
Source Node: 2263925

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In recent years, the world has witnessed a surge in the demand for lithium-ion batteries, primarily driven by the rapid expansion of the electric vehicle (EV) market. europe, in particular, stands at a pivotal juncture. The combination of robust EV infrastructure, heightened income levels among an environmentally conscious populace, and stringent regulations mandating the gradual elimination of fossil fuel-powered vehicles has set the stage for a potential lithium-ion shortage in the region.

While numerous companies are racing to establish battery production facilities across Europe, one name stands out from the crowd: Critical Metals. This enterprise, a spinoff of the renowned Australian mining company European Lithium, is strategically positioned to be at the epicenter of lithium oxide supply. As the continent grapples with a widening chasm between lithium supply and its soaring demand, Can Critical Metals seize this opportunity and truly capitalize on the looming European lithium shortage?

Power Play 

The electric vehicle (EV) revolution in Europe is not just a fleeting trend; it’s a seismic shift driven by a confluence of factors that have made the continent a hotbed for EV adoption. At the heart of this transformation are high-income levels among a climate-conscious populace. This demographic, coupled with unwavering government support for electric vehicle purchases, has accelerated the transition to cleaner modes of transportation.

Furthermore, the extensive collaboration between public and private sectors has led to the rapid build-out of essential EV charging infrastructure. To put this into perspective, from 2016 to 2021, Europe witnessed a staggering 431% increase in the number of public EV charging stations, reaching a total of over 356,000. Yet, the most significant catalyst propelling Europe’s shift to EVs is the European Union’s landmark decision: a complete ban on the sale of fossil fuel-powered vehicles from 2035. This bold move underscores the EU’s commitment to combatting climate change and transitioning to a more sustainable future.

However, with great ambitions come great challenges. A briefing prepared for the EU Parliament in 2021 paints a stark picture of the continent’s future lithium needs. To sustain the projected demand for electric vehicles, which predominantly rely on lithium-powered batteries, Europe will require a staggering 18 times more lithium by 2030 and an astronomical 60 times more by 2050. Currently, the European Union’s lithium supply is precariously limited. Portugal stands as the sole EU Member State actively mining and processing lithium.

While its production primarily caters to ceramics manufacturing, it’s noteworthy that Portugal ranks as the world’s eighth-largest lithium reserve, as highlighted by the 2021 mineral commodity summaries from the US Geological Survey. Amidst this backdrop of soaring demand and limited supply, Critical Metals emerges as a beacon of hope. The company has set its sights on a promising site located 270km southwest of Vienna, Austria, in Wolfsburg. With ambitious plans in motion, Critical Metals aspires for this location to evolve into the epicenter of European lithium production, potentially alleviating the continent’s looming lithium shortage.

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Critical Pursuits 

Situated in Austria is Critical Metals’ fully licensed mine, a project supported by the Austrian government. This mine is notable for its lithium content, which stands at a purity of 99.6% Li2CO3, suggesting a potential mining life of over 20 years. In collaboration with Dorfner Anzaplan, Critical Metals has initiated a pilot plant and conducted a pre-feasibility study.

The preliminary findings indicate an interim net present value of $635 million, with expectations of producing 10,500 tons annually at a price of $26,800 per ton for the next 20 years. The study also points to the possibility of high-grade resources that average 1.0% Li2O, totaling around 12.88 million tonnes. If these projections hold, Critical Metals could position itself as a significant local supplier of lithium in Europe, potentially contributing to the region’s green energy initiatives.

Charged Up 

Europe’s EV sector is expanding, driven by a rising demand for electric vehicles. parallel to this, European battery suppliers are progressing with plans for factories, aiming for an aggregate production capacity exceeding 20 GWh of lithium-ion batteries annually. This involves contributions from established entities like tesla, Volkswagen, Samsung, LG, SK Innovation, CATL, and FREYR.

In this context, Critical Metals has entered an agreement with BMW. From 2026, they will supply lithium-ion to BMW for six years, with an option for a three-year extension. The supply terms start with 5,000 metric tonnes, increasing to 9,000 metric tonnes in the following years, cumulatively reaching 50,000 metric tonnes. 

As part of the agreement, BMW will provide an upfront payment of $15 million, intended to further the mine’s development, securing a right of first purchase for any subsequent capacity. Additionally, Critical Metals has concluded a definitive feasibility study, assessing the project’s viability and financing.

Construction of the mine and concentrator is slated for the third quarter of 2023, with production potentially commencing in 2025. The company expects that by its production onset, lithium prices might see an uptick due to supply constraints.

Bottom Line 

Europe’s transition to electric vehicles underscores the importance of securing a stable lithium supply. As the continent moves towards a more sustainable future, the balance of lithium supply and demand becomes increasingly significant. Critical Metals’ initiative in Austria is a pragmatic response to this challenge. Their potential contribution to Europe’s lithium supply could help stabilize the region’s resource needs. The company’s agreement with BMW highlights the practical steps industries are taking to ensure continuity in supply chains, but only time will tell if the project will be economically feasible based on the prevailing prices at the time of production. 


Source: Peak Power

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