Umicore agrees €125 mil loan with EIB to fund EV battery plant in Poland

European special chemicals and recycling company Umicore has agreed a €125 million ($140 million) loan from the European Investment Bank to finance its battery cathode materials production site in Poland, the two sides said in a joint statement June 15.

The cathode materials will be supplied to manufacturers of lithium-ion batteries, primarily for use in electric vehicles. The EIB loan will cover approximately half of the project costs in its initial phase, with around 350 full time jobs created.

In May, the European Commission said it plans to propose EU sustainable battery rules by October in a bid to challenge China's dominance of the global battery market, which is projected to grow to €250 billion per year by 2025.

The rules aim to give the EU a competitive edge in battery sustainability, performance and safety, and to develop a circular economy for all batteries produced or sold in Europe.

A key issue is access to raw materials, where China also dominates.

The EU is making progress in becoming self-sufficient in lithium, used for lithium ion EV batteries, EC Vice President Maros Sefcovic said.

Teresa Czerwińska, EIB VP overseeing operations in Poland, said: "The trend towards the electrification of the automotive industry is gaining ground and in this context it is important to develop a European capacity across the full value chain of EV battery production".

Europe is playing catch-up with China in the race to create a EV battery supply chain. Localized supply chains have been brought to the fore in the wake of the coronavirus pandemic, and its resulting disruptions.

There are handful of lithium development companies currently trying to bring local supply to the European market in order to secure supply chains and lower carbon footprints as the world gears up for net zero ambitions.

EIB Vice President Andrew McDowell said: "The crisis has highlighted Europe's vulnerability to interruptions in the supply of critical materials and technologies. As the green energy transition accelerates, creating a European battery industry is vital to protect Europe's competitive position in the world economy."

Earlier this year, LG Chem Wroclaw Energy, the Polish subsidiary of South Korea's LG Chem, signed a €480 million ($520 million) loan agreement with the EIB to develop its electric vehicle battery facility in southwest Poland.

Local supply chains

Australia-listed developer Infinity Lithium is in talks to secure potential investment from the EU, as the continent looks to secure a local EV supply chain.

Infinity is developing a mine and processing plant in San Jose, Spain, that will help feed European automakers' lithium requirements for EVs.

"In light of recent events [the fallout from coronavirus], it is clear that moving from a global to [more] regional market [is] key for industrial players and policy makers," Vincent Ledoux Pedailles, executive director at Infinity Lithium, told S&P Global Platts. "The [pandemic] will accentuate even more the need to develop an integrated and local EV supply chain in Europe, with direct access to lithium."

According to the European Battery Alliance, a division of the EIB, some 25 battery factories could be operational across Europe by 2025. These factories would require lithium and other raw materials to create batteries for all kinds of end-products.

Europe's fleet of EVs has doubled over the past two years, with over 1.7 million on the road, according to a report by German think-tank ZSW.

The EBA was created in 2017 and includes the European Commission, the European Investment Bank and key industry stakeholders such as automakers, battery and cathode producers. The EBA's goal is to create a competitive and fully integrated battery manufacturing chain in Europe and avert a technological dependence on Asia.

Filip Platteeuw, CFO of Umicore, said of the investment: "The transition to cleaner mobility is a priority in the European Union's efforts to drastically reduce CO2 emissions, and Umicore is well positioned to support this transition. Through its integrated European battery materials supply chain, Umicore will significantly contribute to the European Union's plans to create a competitive and sustainable battery ecosystem in Europe."

BASF builds presence

Also June 15 German company BASF said it has started construction on its precursor cathode active material (PCAM) plant in Harjavalta, Finland.

BASF said it had secured the construction permits to start building a new cathode active material (CAM) plant in Schwarzheide, Germany, with both plants on schedule to start operations in 2022.

The plants are planned to have enough combined capacity to supply cathode active battery materials for around 400,000 full EVs per year.