It has been deemed the “new gold rush” – a frantic pursuit to catch up with China in the production and refinement of materials essential for various products, ranging from computers to cars. However, one must question whether this endeavor has come too late to salvage Europe’s car industry.
In the heart of a former East German town, lies the initial outcome of the EU’s ambitious plan to mitigate risks and reduce dependence on imports for the green revolution. In Bitterfeld-Wolfen, located 140km southwest of Berlin, a company listed in Amsterdam is racing against time to complete the construction of an expansive factory that will be the first in Europe to yield battery-grade lithium.
Across Europe, a competition has ensued to both mine the silver-white soft metal and manufacture its refined form, lithium hydroxide, which serves as the key ingredient in batteries powering electric cars, robot vacuum cleaners, and mobile phones.
Stefan Scherer, the CEO of AMG Lithium, remarks, “Everybody desires access to lithium. This is why they refer to it as white gold; it has sparked a gold rush. There is hardly a company in the raw materials industry that isn’t exploring lithium. It is simply too enticing.”
The EU finds itself in a state of urgency, having belatedly realized its excessive reliance on China for several critical raw materials. Brussels has identified 16 such materials as priorities in a new industrial strategy aimed at safeguarding the bloc’s economy and achieving the ambitious goal of reducing net greenhouse gas emissions by at least 55% by 2030.
This dependency also unsettles German and other European car manufacturers, as their domestic markets face threats from high-quality Chinese cars and China’s control over lithium processing.
The concerns are so significant that Ursula von der Leyen, the President of the European Commission, has initiated an anti-subsidy investigation into Chinese imports, fearing that major manufacturers like Volkswagen and BMW will struggle to keep up with the supply of electric cars from China.
However, it is worth noting that lithium, for the most part, does not originate from China. So how has China managed to secure such a dominant position? Has Europe been negligent?
Lithium supplies are primarily controlled by five countries, with the majority of the mineral being mined in Australia and Chile. Yet, it is China that has taken the raw material and become the primary supplier of refined lithium.
“They have now become the global hub, granting them economic leverage – or more bluntly, the means for economic coercion,” says an EU source.
The roots of the EU’s dependence on China can be traced back to the 1980s, following the oil crisis when the Chinese leader at the time, Deng Xiaoping, astutely observed, “The Middle East has oil. We have rare earths.”
Rare-earth materials were once abundant in the United States, Europe, and Japan. However, investors in those regions withdrew from mining, deeming it a costly and environmentally detrimental industry. This retreat handed China a significant share of the market, allowing it to acquire the world’s stockpile and eventually become the global hub it is today.
The Russian invasion of Ukraine has brought the lopsided trade relationship into sharper focus.
“Lithium and rare earths are already replacing gas and oil at the heart of our economy. By 2030, our demand for those rare earth metals will increase fivefold,” warned Von der Leyen in her 2022 state of the union address. “We must avoid falling into the same dependence as with oil and gas.”
Consequently, the EU has embarked on a journey to accelerate the development of green technologies through the Critical Raw Materials Act, which was swiftly passed earlier this year. Peter Handley, the head of the raw materials unit in the commission, describes its passage as an accomplishment in record time. The act relaxes state aid rules to compete with the US’s Inflation Reduction Act, sets higher targets for extraction within Europe, and promotes product recycling, particularly for items like phones that contain lithium. If all goes according to plan, the act will become a regulation in the EU this month, setting a high level of ambition.
Before embarking on a trip to Latin America to secure deals for raw material production, Von der Leyen stated that the EU is “97% dependent on China for lithium.”
Back in Bitterfeld, Scherer surveys the colossal plant that will contribute to reducing this dependency. He highlights the towering 20-meter metal vats for lithium solutions and the drying machines that produce a substance resembling sugar crystals – just some of the processes involved in creating the final refined product, eagerly awaited by clients as the first batches of EU-manufactured lithium.
AMG Lithium anticipates commencing operations by the end of this year, with orders extending to 2026. The demand for fresh lithium salt in Europe is projected to rise to 500,000 tonnes annually by 2030, and Scherer affirms their plan to produce 100,000 tonnes, sufficient to provide the active charging ingredient for 2.5 million cars“`
It has been dubbed the “new gold rush” – a frenzied race to catch up with China in the production and refining of essential materials for various products, from computers to cars. However, one must question whether this effort has come too late to salvage Europe’s car industry.
In the heart of a former East German town lies the initial outcome of the EU’s ambitious plan to mitigate risks and reduce reliance on imports for the green revolution. In Bitterfeld-Wolfen, located 140km southwest of Berlin, a company listed in Amsterdam is racing against time to complete the construction of a vast factory that will be Europe’s first to produce battery-grade lithium.
Across Europe, a competition has emerged to both mine the silver-white soft metal and manufacture its refined form, lithium hydroxide, which is a crucial component in batteries powering electric cars, robot vacuum cleaners, and mobile phones.
Stefan Scherer, the CEO of AMG Lithium, notes, “Everyone wants access to lithium. That’s why they call it white gold; it has sparked a gold rush. There’s hardly a company in the raw materials industry that isn’t exploring lithium. It’s simply too alluring.”
The EU finds itself in a state of urgency, having belatedly realized its excessive dependence on China for several critical raw materials. Brussels has identified 16 such materials as priorities in a new industrial strategy aimed at safeguarding the bloc’s economy and achieving the ambitious goal of reducing net greenhouse gas emissions by at least 55% by 2030.
This dependence also unsettles German and other European car manufacturers, as their domestic markets face threats from high-quality Chinese cars and China’s control over lithium processing.
The concerns are significant enough that Ursula von der Leyen, the President of the European Commission, has launched an anti-subsidy investigation into Chinese imports, fearing that major manufacturers like Volkswagen and BMW will struggle to keep up with the supply of electric cars from China.
However, it is worth noting that lithium, for the most part, does not originate from China. So how has China managed to secure such a dominant position? Has Europe been negligent?
Lithium supplies are primarily controlled by five countries, with the majority of the mineral being mined in Australia and Chile. Yet, it is China that has taken the raw material and become the primary supplier of refined lithium.
“They have now become the global hub, giving them economic leverage – or more bluntly, the means for economic coercion,” says an EU source.
The roots of the EU’s dependence on China can be traced back to the 1980s, following the oil crisis when the Chinese leader at the time, Deng Xiaoping, shrewdly observed, “The Middle East has oil. We have rare earths.”
Rare-earth materials were once abundant in the United States, Europe, and Japan. However, investors in those regions withdrew from mining, deeming it a costly and environmentally detrimental industry. This retreat handed China a significant share of the market, allowing it to acquire the world’s stockpile and eventually become the global hub it is today.
The Russian invasion of Ukraine has brought the lopsided trade relationship into sharper focus.
“Lithium and rare earths are already replacing gas and oil at the heart of our economy. By 2030, our demand for those rare earth metals will increase fivefold,” warned Von der Leyen in her 2022 state of the union address. “We must avoid falling into the same dependence as with oil and gas.”
Consequently, the EU has embarked on a journey to accelerate the development of green technologies through the Critical Raw Materials Act, which was swiftly passed earlier this year. Peter Handley, the head of the raw materials unit in the commission, describes its passage as an accomplishment in record time. The act relaxes state aid rules to compete with the US’s Inflation Reduction Act, sets higher targets for extraction within Europe, and promotes product recycling, particularly for items like phones that contain lithium. If all goes according to plan, the act will become a regulation in the EU this month, setting a high level of ambition.
Before embarking on a trip to Latin America to secure deals for raw material production, Von der Leyen stated that the EU is “97% dependent on China for lithium.”
Back in Bitterfeld, Scherer surveys the colossal plant that will contribute to reducing this dependence. He highlights the towering 20-meter metal vats for lithium solutions Critical Raw Materialsand the drying machines that produce a substance resembling sugar crystals – just some of the processes involved in creating the final refined product, eagerly awaited by clients as the first batches of EU-manufactured lithium.
AMG Lithium anticipates commencing operations by the end of this year, with orders extending to 2026. The demand for fresh lithium salt in Europe is projected to rise to 500,000 tonnes annually by 2030, and Scherer affirms their plan to produce 100,000 tonnes, sufficient to provide the active charging ingredient for 2.5 million cars.
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