Lithium is a key mineral in changing future mobility.
There is one catch: the world’s reliance on China for lithium has held back progress.
Until now.
In this article...
- Reliance on China
- How can an ASX small cap help change European lithium landscape?
- City Council of Cáceres to do technical analysis
- Broader support
- What’s next?
Reliance on China
“There is a global race in Europe and the US to change dependence on China for the processing of lithium, one of the key elements to make car batteries,” Caspar Rawles, of Benchmark Mineral Intelligence, a price reporting agency in mineral supplies, told online magazine VOA.
The unlikely hero in this race could be a little-known area of Spain known as Cáceres, found in the autonomous community of Extremadura.
It is here that an integrated lithium project has been designated that could supply the materials for more than 400,000 Tesla Model 3s.
The benefit of local supply would not just be an economic one. It is also an environmental one.
What’s the point of manufacturing electric vehicles when the footprint to do so negates the carbon footprint savings? For instance, most of the lithium mined in Argentina, Australia or Chile is sent to China. It is then processed into battery-grade lithium and used in cars and other products. It is then sent back west to do the same thing.
“More than having lithium, [the important thing] is to have the capacity to treat it so it can be used in a battery. We don't have that at the moment in Europe,” Extremadura New Energies CEO Ramon Jimenez told VOA.
“We don't want the lithium to travel to China to be processed and then come back because we are creating a lot of CO2 that we are releasing to the atmosphere. This creates a big carbon footprint and is not good for the environment.”
A mine and processing plant in Extremadura could help Europe achieve real carbon neutrality at a time when Spain will begin construction of one of its two battery Gigafactories in the first quarter of 2023, which will create more than 3,000 jobs.
Aiming to assist is ASX-listed Infinity Lithium Corporation Ltd (ASX:INF).
How can an ASX small cap help change European lithium landscape?
There is a link between Extremadura New Energies and Infinity Lithium and it’s a big one: Extremadura New Energies is INF’s wholly-owned subsidiary.
Extremadura New Energies is committed to the advancement of the EU’s second-largest hard rock lithium resource to be used as feedstock to a 20,000 tonnes per annum lithium hydroxide conversion plant. It would leave Spain as one of the leaders of Europe’s plan to abandon its reliance on China and become self-sufficient in the lithium space.
Extremadura New Energies hopes to start the Cáceres-based project in what would be a $500 million project.
Underground extraction will be used to provide feedstock to the processing plant on-site, powered using renewable energy and fuelled by green hydrogen.
The plans for the mine changed after the company heard the concerns of the local population.
INF and Extremadura New Energies’ ability to work with the local community has been key in turning around much of the fear that initially surrounded the mine.
This was highlighted recently by the deal inked in March 2022 between Extremadura New Energies and the group known as the Group of Innovative Companies — a collective founded by Extremadura’s Electric Mobility Cluster (CarEX) and business association LOABRE.
The deal will see the companies work together to advance skills and training across the industrial energy storage, electric mobility and renewable energies sectors under the framework of the European Battery Alliance’s (EBA’s) Battery Academy, which is designed to address the mass migration from fossil fuels to electric energy.
It’s a market estimated to be worth €250 billion from 2025, with Europe determined to establish a complete domestic battery value chain to support the clean energy transition.
CarEX president Tomás Sánchez stated: “Signing this agreement today brings me great satisfaction. The true industrialisation of Extremadura begins here.”
Jimenez said at the time, “This will turn Cáceres into a training hub for a sector that is only going to grow in importance. It will provide young people from Cáceres with the skills and employability they need for the future.”
The progress looks to be turning the heads of local politicians, who were initially opposed. Indeed, the whole project looks to be gaining serious momentum.
City Council of Cáceres to do technical analysis
In Extremadura policy seems to be coalescing with ambition.
Over the past few weeks, the City Council and regional government have determined the project is markedly different from the one initially presented and have agreed to study it closely.
Based on the technical criteria for the project, they have deemed that should it be environmentally sustainable, it would be good for Cáceres and Extremadura.
The change in attitude from the Mayor of Cáceres was explained in an interview he did with Cadena COPE. Mayor Luis Salaya said, “when a new project is proposed, we are not opposed to it; we are in favour of checking that things are done well and they are legal.”
Salaya met with Extremadura New Energies after which, stating “this is a project that could be beneficial for the city" and his duty is “to defend what is good for the city and the city’s interest, by analysing the project with all the guarantees that the public administration has to give”.
The mayor also addressed those opposed to the project saying, “we have worked very well up to this point. However, if your position is to reject the project without seeing it and without looking further at a new project that has nothing to do with the open pit mine, our paths separate here.”
According to Infinity general manager, commercial Justin Samulski the turnaround in attitude has been due to Extremadura’s ability to communicate with local government.
“Our local team led by Ramón Jiménez Serrano had the opportunity to meet with Mr Salaya to discuss the project objectively. This meant we had an opportunity for the first time to explain in detail the move from open pit extraction to underground as well as the other environmental considerations the project has made, such as the use of recycled water and developments regarding the use of hydrogen to fuel the kiln.”
Samulski says local support is now a big step forward for Infinity.
“The local and regional governments have called for the presentation of the project and will assess the redesigned underground project against the highest levels of environmental and social conditions.
"Keep in mind this project is technically advanced having announced at the start of the year the production of battery-grade lithium hydroxide from San José feedstock using our innovative, environmentally sustainable process flow sheet at our test facilities with Dorfner Anzaplan.
"The company is committed to delivering an environmentally sustainable and viable project in line with the requirements of the community.”
The trick now is to continue positive communication that would lead to full collaboration.
Broader support
Support has also come from the Regional Government of Extremadura, whereby spokesperson Juan Antonio González endorsed the Cáceres mayor’s sentiments, saying that if the project is environmentally sustainable there should be no problem in the project moving forward and that no politician should be opposed. He said Salaya was taking a common-sense approach.
“I hope it is an environmentally viable project because that would be good for Cáceres and for Extremadura, but it must meet a series of requirements.”
It would also fit the Federal Government’s agenda.
“Spain is the second-largest automaker in Europe,” Samulski says. “The auto industry currently makes up 10% of the country’s GDP and they have ambitions to increase that to 15%. The government has recognised the necessity to develop a lithium-ion battery supply chain to cornerstone the transition to mobility.
"The robust Spanish automotive industry will be further focused on energy transition following the European Parliament’s vote to support a proposal to ban the sale of new petrol and diesel engine vehicles by 2035.
“Spain has a real opportunity in this space and is now capitalising with the announcement of two Gigafactories being constructed in the country (one in Extremadura).
"The regional government has stated it considers it would be ideal to complete the value chain in Extremadura and Europe is also wanting to secure its own energy independence and source of raw materials. Our project’s location obviously puts us in a strong position to play a role in this.”
INF will continue to cooperate with all levels of government within Spain and at a European level, but believes that with the opportunity to explain what it is doing in the region and what it will mean for the locality, positive outcomes will ensue.
Certainly, with a range of signed agreements now in train with the local business networks from Cáceres and the region of Extremadura, the fruits of INF’s labour are starting to come to fruition.
“Over the last few months, our local subsidiary Extremadura New Energies has linked up with the main business advocacy and industry groups from the region and signed a number of collaborative and cooperative agreements,” Samulski tells Proactive.
“These groups allow us to reach more people in order to explain the project but also for us to understand what needs to be done to maximise economic benefits and employment opportunities attributed to the project.”
A key pillar in these agreements has been the CEC Business Circle, which represents more than 3,500 businesses in the region. They were the first local group to publicly support the project and provided an avenue for INF to properly discuss its benefits with local business owners from Cáceres.
Samulski says the opportunity for the local community is immense. “It is an enormous level of investment for the town, will be a major source of permanent long-term direct jobs and thousands of indirect jobs. It will also provide a new industry for the town of Cáceres which could establish it as a centre of leadership in the space.
"The segments of the community we have been able to reach so far have been very supportive of the project and there has been a real shift in position for those that may have been opposed based on it now being underground and understood.”
What’s next?
The City Council of Caceres has invited Extremadura New Energies to formally present the project, facilitating a pathway forward for the technical assessment. The social licence to develop and progress the project is an essential requirement, and through the logical and transparent assessment, the full benefits and opportunities for the locality can be presented.
INF is assessing the avenues to advance the presentation of the project which will involve direct engagement with major stakeholders.
The wheels continue to turn.
The hard work and connection are beginning to pay off at a time when Europe is looking for its own lithium pathway.