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Australians to ramp up European EV partnerships as supply chain pressure builds

ASX-listed explorer Core Lithium Ltd. has become the sixth Australian entity to join the European Battery Alliance, or EBA250, which comprises over 400 global participants aiming to create a European electric vehicle battery supply chain.

Experts say the number of Australian entities in the alliance could grow given reports that Europe's EV demand exceeded China's in the first quarter, albeit amid COVID-19 related shutdowns by the latter.

Core Lithium announced the move July 14 after signing a nonbinding off-take term sheet with Geneva-based Transamine Trading, covering a five-year supply of 50,000 tonnes per year of spodumene concentrate from its preproduction-stage Finniss lithium project in Australia's Northern Territory.

The company's foundation off-taker, China's Sichuan Yahua Industrial Group Co. Ltd., also recently agreed to expand its commitment by 50% and take 75,000 t/y of 5.5% lithium oxide concentrate from Finniss.

Europe eyeing Australia

Core Lithium's statement cites EBA250 manager Thore Sekkenes as saying the company's interest in engaging directly with the European market was "extremely welcome" while noting Australia's significant lithium expertise.

"Europe is focused on building sophisticated capabilities across the entire battery value chain — from raw and active materials through to cell manufacturing and machinery, battery packs systems, applications and recycling," Core Lithium Managing Director Stephen Biggins said in the statement.

Biggins told S&P Global Market Intelligence that the company is starting to experience demand exceeding the amount of product targeted at Finniss. Bloomberg News recently cited a PricewaterhouseCoopers study indicating that Europe's five largest automotive markets overtook China in EV registrations in the first quarter amid COVID-19-related shutdowns in China.

Biggins sees an inflection point in EV pricing versus combustion engine pricing in the next 36 to 48 months. As supply chains increasingly diversify away from China, he believes there will be more Australian battery mineral developers seeking off-takes with European players to match what has happened with Asian automated and EV supply chains.

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SNL Image
Future Battery Industries CRC
COO Jacques Eksteen.
Source: Curtin University

Jacques Eksteen, COO of the Future Battery Industries Cooperative Research Centre in Western Australia, said there is still a "huge opportunity" for Australian lithium hopefuls to partner with European entities, with some 500 GWh per annum of battery production planned across various plants in Europe by 2025.

Once the center and others establish Australia's environmental credentials of ethical battery supply chains sought by European partners, the country's battery mineral hopefuls will be able to "negotiate a better deal," Eksteen said in an interview. One such initiative is the repurposing of BHP Group's battery-grade nickel sulfate test plant in Perth, Australia into a cathode precursor production pilot plant.

Eksteen said Australian material is preferred as Europe's lithium deposits tend to be very small, low grade and contain lots of fluoride requiring treatment with hydrofluoric acid.

Meanwhile, South America's salt lakes contain large lithium sources with lower costs but processing is water-intensive, which has triggered community pushback in dry areas. Its brine refineries also take time to be developed and produce lithium carbonate, which is not as ideal a raw material for battery cells as the lithium hydroxide produced from Australian spodumene.

"In Australia we can very quickly produce a spodumene concentrate so time to market is fast, and existing refineries that can manufacture lithium hydroxide in China can move quite quickly," Eksteen said.

The elasticity of Australian supply was proven when Pilbara Minerals Ltd.'s Pilgangoora project in Western Australia went from discovery to product shipment in under four years, according to Eksteen.

Australian presence

Despite the ASX and Australia itself hosting dozens of EV battery mineral projects, Core Lithium is the sixth Australian entity to join the alliance, alongside the government of Western Australia, which hosts seven hard rock lithium projects. European Lithium Ltd.'s Austrian Wolfsberg project and Infinity Lithium Corp. Ltd.'s Spanish San Jose project are both at the feasibility stage of development.

The alliance also cites Talga Graphene AB, a Swedish subsidiary of graphite developer Talga Resources Ltd., and notes EcoGraf Ltd. as a German entity, though the latter is planning a spherical graphite plant in Western Australia while progressing its feasibility-stage Epanko graphite project in Tanzania and is listed on the ASX.

While not classified as an Australian entity as its headquarters are in London, iron ore major Rio Tinto is also a member with many battery mineral initiatives including studying ways to extract lithium from waste rock at its borates operation in California.

Rio Tinto also has its Jadar lithium-borate project in Serbia and the Musgrave Joint Venture with PepinNini Lithium Ltd. in South Australia, among others. U.S.-based lithium major Albemarle Corp., which owns nearly half of the massive Greenbushes mine in Western Australia, is also in the alliance.