Europe Races to Ramp up Lithium Supply for Electric Cars

As electric vehicles rapidly gain popularity across Europe, the region is racing to ramp up lithium production, a key component in EV batteries.

For years, Europe has relied heavily on imported refined lithium, mainly from China. But this dependency could now pose an existential threat to European automakers.

China's Dominance in Lithium

China gained its dominance in lithium by heavily investing in mining and refining capacity decades ago. For example, Chinese battery and EV manufacturer BYD got into lithium mining as far back as 1995.

Whereas in the 1980s, Europe and other developed regions moved away from mining critical minerals like lithium due to high costs and perceived environmental impacts. This effectively handed control of the global lithium supply chain to China.

Now, Chinese firms account for 90% of LFP cell manufacturing worldwide.

This gives China immense economic leverage and battery cost advantages. 

Can Europe Catch Up?

With at least a 10-year head start in EV battery technology and production capacity, Chinese manufacturers have already begun exporting electric cars to Europe at very competitive prices.

Last year, China surpassed Turkey as the top exporter of vehicles of all engine types into the European Union. Some industry analysts have concerns that European car manufacturers may struggle to match China's quick expansion in reasonably priced electric cars.

However, supporters argue Europe can still gain ground in the transition to EVs by incentivizing consumers, securing access to raw materials, and adjusting trade policies.

For example, the EU plans to relax state aid rules and raise extraction targets for critical minerals under their new Critical Raw Materials Act. The legislation aims to help European companies compete with subsidies in the U.S. Inflation Reduction Act.

The EU is also launching an anti-subsidy investigation into Chinese auto imports over unfair competition concerns. 

Ultimately, boosting EV adoption in Europe will require making electric cars more affordable through purchase incentives, tax benefits, and charging infrastructure buildout.

On the supply side, Europe will need to accelerate lithium production significantly. However, constructing an entire battery supply chain on home soil will be hugely expensive and time-consuming.

Europe's Rise In Home-Grown Lithium

To reduce reliance on imported lithium and build a domestic supply, European companies have started constructing the first large-scale lithium refineries on the continent.

For example, in Germany, AMG Lithium of AMG Critical Materials NV (AMVMF:OTCMKTS;AMG:AMS) is nearing completion on a massive lithium hydroxide plant in Bitterfeld-Wolfen. The facility is set to begin operating later this year, with the aim to produce 100,000 tonnes of battery-grade lithium hydroxide annually. This amount would be enough for over 2.5 million electric vehicles.

AMG Lithium already has purchase orders lined up through 2026.

Beyond Germany, several other projects are underway across Europe to extract lithium from domestic resources and build processing plants. For instance, in Portugal, Britain's Savannah Resources Plc (SAV:LON) is developing a lithium mine to produce spodumene concentrate, a key lithium-containing mineral.

The company notes, "The project is now well established as Western Europe's most significant spodumene lithium project."

Another company working to boost the West's lithium supply is Global Battery Metals Ltd. (GBML:TSX; REZZF:OTCMKTS). At its Leinster Lithium project in Ireland, Global Battery Metals is currently drilling after grab samples of up to 3.75% Li2O. IberAmerican Lithium Corp. (IBER:NEO)

Its claims cover over 525 sq km south of Dublin and are situated next to ILC and Ganfeng's Blackstairs project. The combined projects could turn into a major lithium district supporting Europe. 

Lastly, Spanish company IberAmerican Lithium Corp. (IBER:NEO) is one of the players trying to develop new lithium projects domestically. IberAmerican Lithium has identified significant lithium mineralization at its Alberta II concession in the Galicia region of Spain, with over 25 drill intercepts above 1% lithium oxide.

In September 2023, IberAmerican Lithium revealed it had acquired full ownership of its lithium projects located in the Galicia region of Spain. By acquiring the remaining stake in these concessions, IberAmerican Lithium has complete authority over operations and stands to reap all financial benefits from future production. This complete control provides IberAmerican Lithium with the flexibility to advance the deposits toward lithium production independently. 

IberAmerican aims to delineate an initial resource of 10 million tonnes grading 1-1.1% lithium oxide through planned exploration drilling in late 2023 and 2024. Success by IberAmerican Lithium could help provide the domestic lithium supplies that European automakers desperately need. Ramping up production at deposits like IberAmerican's Alberta project will be key for Europe achieving greater self-sufficiency in EV battery metals and reducing reliance on imports from China.

As for the company itself, the company had a starting market of CA$27,375,122, with 109,500,488 shares outstanding, 9,450,000 options, and 18,225,244 warrants expiring September 1, 2026.

About 36% of the company is held by insiders, including CEO Becher, Director and Chairman Eugene McBurney, and Director Miguel del Campa.

About 25% of the company is in institutions, including Delbrook Resource Opportunities Master Fund LP (Grandy Cayman Islands), Jayvee & Co., CI Resource Opportunities Class, and Delbrook Resources Opportunities Fund (Vancouver).

The rest is retail.

The company is currently trading, at the time of writing, at a market cap of ~CA$22 million, with about 110 million shares outstanding.

Conclusion

While China may have a head start, companies like IberAmerican Lithium show Europe still has a fighting chance at establishing its own EV battery supply chain. With major lithium deposits and processing plants now under development, Europe is making strides towards greater self-sufficiency. IberAmerican Lithium's Alberta II project could be a game-changer, providing a major new source of domestic lithium in Spain's Galicia region.

If IberAmerican can successfully ramp up production, it would mark a huge step forward in Europe's pursuit of lithium independence. Other firms are also racing to unlock European lithium resources.

Though it may take a while to get new mines operational, the rapid progress demonstrates Europe's commitment to securing its EV future. With continued investment and policy support, companies like IberAmerican Lithium can help Europe catch up and become a world leader in the booming electric mobility revolution.

Important Disclosures:

1. IberAmerican Lithium Corp. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000. 
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of IberAmerican Lithium Corp. and Global Battery Metals Ltd.
3. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

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