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Europe starts to plough more money into battery investment, China still leads: industry

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Europe starts to plough more money into battery investment, China still leads: industry

London — It was a week of mixed emotions for the global battery industry, with the market largely focused on the need, and potential, for Europe to start catching up with China in the race for battery metal supply and processing.

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There have been increasing fears that Europe, and the US, are being left behind as China powers ahead with investments and partnerships across the globe.

Europe may be investing more in the battery manufacturing industry, but questions remained as to how quickly adoption of electric vehicles will actually take place, according to speakers at S&P Global Platts' inaugural Global Metals Outlook Summit in London.

One of the biggest hurdles, echoed by the wider market, was infrastructure to support charging, Patrick Schaufuss from consultancy McKinsey said, noting that China remained the dominate force in the battery sector.

On Schaufuss's estimate, three million charging points will be needed in Europe alone by 2030. As such, another vital ingredient in the mix will be vehicle sharing.

Global diversified miner BHP revised its outlook for electric vehicle adoption rates higher to 7% by 2035 and 27% by 2050, from 5% and 21% previously.

BHP said costs need to be reduced to $100/kWh from around $180/kWh currently, and noted that the ratio of one charging unit per new vehicle was "OK, but it is far from spectacular."

"To paraphrase the now cliched phrase 'build it and they will come', we argue that 'build them [the chargers] and they [consumers] will buy [EVs]'," BHP VP market analysis and economics Huw McKay said.

Still, news of investment over the past week continued to point East. China's Ganfeng, one of the world's largest lithium producers, is buying a 30% stake in UK-based Bacanora, which is hoping to produce 17,500 mt/year of the metal used in making batteries for electric vehicles when it completes its flagship mine in Mexico.

Still, as China continues to forge ahead in the global battery metals supply chain with investments across the industry, Europe is slowly picking up pace, while the US is getting left behind, Bacanora Lithium CEO Peter Secker told S&P Global Platts.

"American rates of vehicle electrification are behind Asia," Secker said. "The Chinese are looking for long-term lithium supply at the lower end of the cost curve, and are prepared to pay for it."

Secker said that he is also seeing a lot of positive steps forward in Europe, led by Germany.

"I would say that [the] German EV battery industry is about five years behind the Chinese," he said, noting that three years ago he would have been far more downbeat about the outlook for Europe and its battery investment.

The EU is keen to develop a domestic manufacturing base for lithium-ion and other batteries, as its battery market could be worth up to Eur250 billion in 2025.

As such the European Investment Bank this month agreed in principle to lend Eur350 million ($392 million) to support Northvolt's lithium-ion battery cell gigafactory in Skelleftea, Sweden -- the first such facility planned in Europe.

The EIB loan is to help finance setting up the first 16 GWh a year of battery capacity production at the Northvolt Ett gigafactory, the EIB said on May 16.

The first quarter of the gigafactory is planned to be completed in 2020. Once fully built, the gigafactory will be able to produce 32 GWh/year of battery capacity. The batteries are targeted for use in automotive, grid storage, and industrial and portable applications.

-- Ben Kilbey,

-- Edited by Norazlina Jumaat,