Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
European banks are too slow to finance mining projects because of red tape linked to environmental, social and governance (ESG) issues, France’s Eramet said, as it pursues a lithium project with China’s Tsingshan that could cost $1.5 billion.
Eramet aims to start producing lithium in Argentina in the second quarter of next year under the first phase of its joint venture with steel giant Tsingshan, part of Eramet’s shift towards minerals needed for electric vehicle batteries.
If the partners proceed with a second stage of the project, for which a decision is due by the end of this year, total investment is expected to reach about $1.5 billion, Eramet CEO Christel Bories told Reuters.
This is lower than a $1.7 billion projection given by Tsingshan. It would double the estimated $735 million cost of the project’s first phase.
Eramet will share costs with Tsingshan. It will also raise $400 million in a deal with miner Glencore to market lithium from the project’s first stage.
Bories said Chinese investors are typically keen on mining projects internationally, but European banks are held back by onerous ESG requirements.
“The worst is Europe. Banks ask thousands of pages of questions on ESG and due diligence,” she said in an interview before the LME Week gathering of the global metals industry.
“We have no problem providing the evidence … but at the end of the day the whole process can take 18 months.”
The European Union, which unveiled its Critical Raw Materials Act in March to try to secure supplies of critical raw materials for electric vehicles including lithium, cobalt and nickel, has urged European financiers to provide more funding to mineral suppliers.
Eramet has previously criticised Europe for being slow to develop supply chains for critical minerals, saying that encouraged it to turn to Tsingshan first as a partner for a nickel mine in Indonesia and then to co-develop its lithium deposit in Argentina.
The partners plan to reach output of 24,000 metric tons of lithium carbonate equivalent annually under the first phase of their Argentine project, with the potential second stage seeking to raise production to 75,000 tons.
Eramet is also studying a plan with German chemical group BASF to produce battery-grade nickel and cobalt from ore extracted at Eramet’s Indonesian mine.
The French group has pushed back a deadline for a decision to next year, with Bories saying it needed more time to find the right approach to meet Western standards.
(By Pratima Desai, Clara Denina and Gus Trompiz; Editing by Mark Potter)
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