The European Commission is currently evaluating a proposal or classifying lithium carbonate, lithium chloride and lithium hydroxide as materials harmful to human health. Yabao, the world's largest lithium producer, said that once the proposal is legislated, the company will have to close its plant in Langelsheim, Germany, or will affect its annual sales of about US $500million**
The European Union may list lithium as a hazardous substance, and lithium mining giant Yabao has the risk of closing its plant in Germany
On Tuesday, June 7 US Eastern time, according to media reports, Albemarle, the world's largest lithium producer, said that if the EU listed lithium as a dangerous material, it would have to close its plant in Langelsheim, Germany.
Scott tozier, chief financial officer of Yabao, said that the company would not be able to import lithium chloride, the main raw material, so that its entire plant in Langelsheim faced the risk of closure. In an email statement, tozier said that the annual sales of its plant in Germany is about 500million US dollars. If it is forced to close, it will have a significant impact on Albemarle's operation.
Yabao's plant in Germany has been producing lithium since 1921, with more than 600 employees, which is expected to account for 8% of the company's net sales in 2022.
It is reported that the European Commission is currently evaluating a proposal of the European Chemicals Administration (ECHA) to help the EU achieve self-sufficiency in electric vehicle batteries. The proposal lists lithium carbonate, lithium chloride and lithium hydroxide as materials harmful to human health. However, the proposal does not prohibit the import of lithium, but if legislated, it will increase the cost of processors, because stricter rules control processing, packaging and storage.
An official of the European Commission confirmed that it was evaluating the proposal, but did not disclose more details. It is reported that the European Commission will hold a meeting from July 5 to 6 to discuss whether to list lithium and other materials as hazardous substances. The final decision is expected to be made by the end of 2022 or the beginning of 2023.
In the past two years, the United States and Europe have accelerated their efforts to establish safe and independent supply chains to reduce their dependence on key mineral resources used in other countries for electric vehicles, wind turbines and solar panels.
The transportation industry accounts for one fourth of the EU's carbon emissions. To achieve the goal of carbon neutrality by 2050, the only way is to decarbonize the transportation industry. To this end, the EU hopes to have 30million electric vehicles by 2030, but this has greatly increased the demand for lithium for electric vehicle batteries.
In a strategic plan for key raw materials released by the European Commission in September 2020, it is predicted that by 2030, in order to meet the demand for vehicle batteries, the demand for lithium in Europe will reach 18 times of the current supply, and by 2050, it will be 60 times more.
However, the EU does not produce lithium, but relies entirely on imports (78% from Chile, 8% from the United States and 4% from Russia). Therefore, the big problem facing the EU is how to meet the additional demand. Although Chile accounts for 44% of the world's lithium supply, followed by China with 39%, the solution given by the EU is to mine new lithium mines and fully exploit local reserves. Under the guidance of this strategic plan, several lithium mining projects have been launched throughout the EU.
Tozier said that the proposal may "hinder the localization of the EU battery supply chain because it transfers the process to non EU regions, thus generating import demand."
In the future, battery recycling and battery cathode manufacturing will be transferred outside the EU. Yabao will not be able to convert materials locally. Any EU lithium raw materials need to be exported to manufacture cathodes.
On Tuesday, Yabao closed up 0.039%, and Yabao has risen 8.97% year to date. On June 1, affected by the news that the Argentine customs set a reference price of US $53 per kilogram for lithium carbonate export, US lithium mining stocks fell generally, of which Yabao fell 7.8%.