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Metals industry opposes proposed EU toxic label on key battery component lithium

Europe is at risk of falling even further behind China in the race to secure metals used to power electric vehicles if an EU proposal to label lithium “toxic” is approved, industry bodies have warned.

In a letter sent to EU policymakers this week, seven business groups, including Eurometaux and the International Lithium Association (Ilia), expressed “deep concern” about a proposal by the European Chemicals Agency (ECHA) to classify lithium, a key battery metal, as a “Category 1A reproductive toxin”.

The call for lithium carbonate, hydroxide and chloride to be labelled as substances that may damage fertility and unborn children was presented to the European Commission early this year. It is under review, with a final decision expected from policymakers at the end of 2022 or beginning of 2023.

In an open letter, the industry groups say the scientific evidence is “too weak” to “justify” such a severe classification, which they warn would have a major impact on Europe’s industrial goals for electric vehicles, batteries and critical raw materials.

“An unjustified lithium salts classification will be a red flag that brings great uncertainty to companies looking to make long-term investments into European refining and recycling capacity.”

Lithium, which is extracted from brines in South America or from rocks in Australia, is one of the key materials needed to make the batteries that power electric vehicles. That pivotal role led to it being added to the EU’s list of critical raw materials in 2020.

However, there are at present no commercial refiners in Europe, making the region’s battery makers almost totally reliant on China for supply, where more than 90 per cent of the world’s refined lithium is produced.

“The proposed reclassification of lithium to a toxic chemical could have major ramifications for battery manufacturers looking to develop European-based lithium supply chains,” said a lithium trader.

“This would directly impact rules and regulations around handling, processing and development of future assets. All of which would add additional cost to an underinvested industry in the EU,” said the trader.

James Ley, of consultants Rystad Energy, said the potential classification of lithium as a toxic material stood “in polar opposition” to EU’s target of 100 per cent zero-emission vehicles sales by 2035. “That was hard enough to reach already, without adding additional constraints on domestic lithium production,” he said.

Roland Chavasse, secretary-general of the Ilia, said toxicity classifications needed “robust and impartial” assessment of all the available scientific data.

“This does not appear to have been the case in this instance,” he said, citing an objection from Finland’s chemicals agency. “The science used to support the proposed reclassification is very thin and chooses to ignore a wealth of contract evidence.”

Albemarle, one of the world’s biggest lithium miners, said the misclassification risked stigmatising lithium, “with negative effects for industrial projects in Europe” including its plans to invest in a conversion plant.

“Lithium would likely continue to be processed outside of Europe and then imported. This lack of investment would require lithium recycling to occur outside of the EU,” it said.

Lithium prices have been strong in 2022, with carbonate and hydroxide assessments rising sharply.

Even without the hurdle created by reclassification, Ley said demand for lithium from European battery manufacturers was on track to outstrip supply significantly.

“The supply of lithium hydroxide, which is required to produce nickel-rich lithium-ion batteries that enable EVs to have longer driving range, is estimated to be 68 per cent short of demand in Europe in 2025, and that deficit is likely to hit 218 per cent in 2030,” he said.

The UK is set to propose its own classification on lithium later this year.

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