The contract processing of lithium is something Europe and the Western world in general has been slow off the mark with; so much so that until recently there was a genuine concern that the supply of refined lithium would be controlled mainly by China, both in terms of the initial mining rights in developing countries and through a monopoly on refineries.
While Chinese attempts to extend its belt-and-road policy to lithium may yet see it able to capture the lion’s share of the material in some countries with rich deposits, like Zimbabwe, the discovery of more deposits elsewhere, including in Europe itself, has eased these supply concerns.
Alongside this, new refineries are on the way, with the UK set to have two in the Tees Valley up and running soon, run by Green Lithium and Tees Valley Lithium respectively. The latter plant alone will provide enough refined lithium to meet 15 per cent of Europe’s needs by 2030.
The Serbian Game-Changer
Britain’s supply is set to include small amounts of domestically produced lithium from mines and brine extraction plants in Cornwall and County Durham, but the biggest deal happening at the moment involves the EU and Serbia.
While a candidate to join, Serbia is not yet an EU member and if there were geopolitical concerns about China controlling lithium supplies, so there have been some worries regarding Serbia due to its historic ties with Russia. But if that led some to worry that Belgrade would not do a deal with the EU over its lithium, this has proved unfounded.
Instead, a deal has now been agreed upon with the EU, just days after the restoration of mining firm Rio Tinto’s licence to extract lithium in the Jadar Valley.
Local environmental concerns rather than global geopolitics had been the sticking point and this remains so for campaigners against mining in the area, but now the valley promises to play a huge role in meeting EU supply needs, meeting around 90 per cent of demand.
The importance of the deal was emphasised by just who was in Belgrade to push it over the line. The European Commission’s vice-president, Maros Sefcovic called the meeting a “critical raw materials summit”, while German chancellor Olaf Scholz was there, highlighting his company’s role as the EU’s biggest car maker.
Indeed, Mr Scholz expressed delight at the deal, stating that it would help Europe remain “sovereign in a changing world” and not be dependent on China.
A further agreement was signed on a “strategic partnership on sustainable raw materials, battery production chains and electric vehicles.”
Will Britain Benefit?
The geopolitical significance is evident, ensuring that lithium supplies do not go down the same road as oil and gas of being controlled by nations aligned against the West, a coalition Russia has been loosely building with China and even with North Korea and Iran. Perhaps the lure of potential EU membership has helped sway Serbia in a Western direction.
This may leave questions about the one country where EU membership ceased to offer a compelling prospect to a small majority of the electorate. While Serbia’s deal won’t directly impact the UK, the fact it has such abundant reserves in the Jadar Valley means there could be room for the UK to negotiate a deal too.
With a commitment to expanding green energy and the timing of already-approved refineries by the Tees being very convenient, any such agreement would be a big win for the new Labour government, although it may gain more kudos domestically for continuing the last government’s support for UK lithium mining development.
The State Of The World Market
On a more global scale, the wider story continues to be one of a glut of lithium. Bloomberg recently reported that with global prices continuing to hover around a three-year low, down around 80 per cent since 2022, some mining companies across the globe are thinking in terms of reducing their output.
This, of course, would not be a terrible problem. It would mean demand was being met, while the lithium would still be there, accessible for mining firms to extract at a later date. As the use of lithium batteries in cars and other sectors grows, it will still be needed in due course. Further discoveries will remain necessary and welcome.
With an abundance of supply and security of it, the chemical processing sector in the UK and across Europe can look forward to a lot of business with lithium over the coming years. Indeed, it may be that the Tees refineries are the first of several in the UK, helping serve new gigafactories arising all over the UK.