Small miners aim for European supply chain for electric vehicles independent from China

NextSource Materials

16/07/2021 13:12

By Clara Denina  and Zandi Shabalala
    LONDON, July 16 (Reuters) - Growing demand for electric
vehicles has spurred small-scale miners of the lithium, cobalt
and rare earths that automakers rely on to develop mines and
build refining capacity in Europe to reduce their reliance on
China.
    Efforts by the United States and Europe to build a secure
and independent supply chain for the key minerals used in
electric vehicles (EVs), wind turbines and aircraft engines have
accelerated as the pandemic led to shutdowns and shortages.
    With companies under pressure to reduce their carbon
footprint, processing metals into goods that are circulated
within the continent and do not have to travel far is an
environmental goal. 
    At least four smaller companies are building facilities to
process ore in Europe's special economic zones over the next
five years, with more planning to build mines on the continent
and process materials on site, company officials said.
    Mkango Resources  MKA.V , a rare earth developer with
projects in Malawi, is working with chemicals company Grupa
Azoty Pulawy to build a separation plant in Poland's Special
Economic Zone, benefiting from tax exemptions and state aid.
    "The site... aligns with European initiatives to create more
robust, diversified supply chains," said Mkango Resources CEO
William Dawes.
    Rare earths, such as neodymium, praseodymium, terbium and
dysprosium, are used to make magnets to fire EV engines and
operate windows, offshore wind turbines and other high-tech
devices. China currently provides 98% of the world's supply.
    Europe is home to automakers including Volkswagen  VOWG.DE ,
BMW Group, Stellantis  STLA.MI  Renault  RENA.PA , as well as
suppliers of automotive components, who are under pressure from
regulators to source materials within the region.
    EU "rules of origin", which determine where goods have been
manufactured or produced, stipulate that 65% of the value of a
product will need to be locally sourced from 2027 to qualify for
tariff-free movement of goods within the bloc.
    Relocating from low-cost jurisdictions such as Asia carries
risks, said Craig Scherba, president of graphite developer
NextSource Materials  NEXT.TO , which has a project in
Madagascar and plans a battery anode facility, with Europe one
of the possible locations. 
    "Those that can maintain low costs will survive," he said.
    Elsewhere, rare earths developer Pensana Plc  PRE.L , which
owns assets in Angola, is building a plant to purify the metals
in Britain, using the UK government's Automotive Transformation
Fund, which awards grants to accelerate the transition to a
net-zero vehicle supply chain.
    "There are a number of incentives which have been put in
place," said Pensana Chairman Paul Atherley.
    The Saltend plant had lower capital expenditure and
operating costs than at comparable sites in Europe, he said.
Saltend is in the Humber ports region which has freeport status,
making arriving goods exempt from tariffs.  
    Pensana has so far secured 15 million pounds ($20.96
million) through an equity raise for the $125 million plant
which will create about 100 jobs. 
    For the local community, new jobs are welcome, but union
representatives say that British industry will also have to
invest in training workers. 
    Australia's Infinity Lithium  INF.AX  is seeking to develop
the San Jose Industrial Lithium Project in Spain, an open-pit
mine that aims to also treat and refine onsite.
    NeoMetals  NMT.AX , another Australian firm, is planning a
lithium recycling plant in Germany. 
   For major miners, who deal with much bigger tonnage, building
facilities in Europe is generally uneconomical but some are
making the move.
    Glencore  GLEN.L  is looking at European processing plants,
including in Britain, for their recycling operations, while Rio
Tinto  RIO.L  plans to have a processing facility onsite at its
Serbian lithium mine Jadar, expected to start a feasibility
study at the end of 2021. 
    Part of the role so-called junior miners serve in the
industry is to de-risk projects and undertake the early
development works, which in some cases leads to acquisition by
larger miners, said Caspar Rawles at Benchmark Mineral
Intelligence (BMI).    
    
($1 = 0.7158 pounds)
($1 = 0.8457 euros)

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GRAPHIC-Energy transition metals poised for uneven, explosive
run higher     urn:newsml:reuters.com:*:nL5N2ND5SK
COLUMN-The human bottleneck in critical minerals supply chains:
Andy Home     urn:newsml:reuters.com:*:nL5N2ND5B9
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 (Reporting by Clara Denina and Zandi Shabalala, editing by
Louise Heavens)
 ((clara.denina@thomsonreuters.com + 44 207 542 9420. Reuters
Messaging: clara.denina.thomsonreuters.com@reuters.net. Twitter:
https://twitter.com/claradenina))