Saudi Arabia expands lithium processing to supply BMW

    WORLD  03 June 2023 - 09:01

    Saudi Arabia is planning a second lithium processing facility, as it steps up efforts to work with western partners to develop its battery supply chain.

    The facility, which will use feedstock mined in Austria to produce refined lithium hydroxide for BMW, is a sign of how supply chains to process the metal are slowly developing outside China, Financial Times reports.

    China accounts for nearly 60 per cent of global processing for lithium, a critical ingredient in electric car batteries — and the EU and US are bolstering incentives to create more capacity.

    Australia-listed lithium start-up European Lithium and the Saudi industrial conglomerate Obeikan Investment Group will each take a 50 per cent stake in the plant. The facility will cost $350mn-$400mn and will probably produce its first lithium hydroxide in 2026.

    European Lithium will supply the processing plant with lithium ore, known as spodumene, from its mine in southern Austria.

    “A lot of the world is fearful about what would happen if China switched off its [lithium] exports,” said Tony Sage, executive chair of European Lithium. “It would be a disaster for the energy transition.”

    For Saudi Arabia, the project is the latest in a series of deals aimed at boosting its role in electric vehicle production and the battery supply chain — part of broader efforts to diversify beyond oil revenues.

    Earlier this year Saudi Arabia signed an agreement with EV Metals, an Australian battery manufacturer, to develop a lithium hydroxide plant that will be in production in 2026.

    Lithium processing is highly energy intensive and Sage said Saudi Arabia was an attractive location for a processing facility because of its cheap energy.

    Saudi Arabia aims to produce 500,000 vehicles a year by 2030, including those produced in the country by US-based Lucid Motors, in which its sovereign fund the Public Investment Fund acquired a majority stake.

    Lucid, which has struggled over the past few years, said on Wednesday it would raise $3bn in a stock offering, with 60 per cent of the funds coming from the PIF.

    The wealth fund, which is chaired by Crown Prince Mohammed bin Salman, has also started its own electric-vehicle manufacturer, Ceer, which is planning to produce 170,000 vehicles a year, in conjunction with Foxconn and BMW.

    The lithium hydroxide produced by the European Lithium facility will be sold to BMW as part of an existing supply agreement. European Lithium will provide 9,000 tonnes of lithium hydroxide annually to the carmaker from 2027.

    Even while the west has been scrambling to secure lithium resources, prices for the metal are down nearly 50 per cent since the beginning of this year — although they are still above the average of the past three years.

    European Lithium said its total capex needs for building its Austrian mine and nearby ore concentrator, as well as developing the Saudi plant, would be between $800mn and $900mn. It is planning a secondary listing on Nasdaq via a special purpose acquisition company, or blank cheque merger, in the coming months.

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