Battery metals

Oz companies watching EU move to list lithium as a toxin

Tue 21 Jun 22, 2:38pm (AEST)
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Key Points

  • The European Commission is considering listing three key lithium salts as toxic chemicals on fertility concerns
  • Vulcan Energy’s chief executive has told the AFR the EC has failed to absorb recent studies on lithium hydroxide, a key battery material
  • Dutch Rystad Energy says the move will likely lead to higher opex costs for all EU lithium operators

Next month, EU member states will give their views on a proposal from the European Commission (EC) to reclassify lithium hydroxide as a dangerous toxin. 

Lithium hydroxide is one of three lithium products the EC is proposing higher regulations around on evidence the compound harms reproductive health and fertility. 

While lithium usage would not be made illegal by any means, Dutch firm Rystad Energy notes the move would likely impact the EV battery supply chain at all stages: mining, processing, cathode production, and recycling stages.

The EC publishes its first draft of the act in Q4 of this year.

“Several administrative issues, risk management and restrictions could hit each of these fledgling industries in Europe, which would drive up costs,” the firm notes. 

Rystad’s Senior Vice President of Analysis James Ley was more direct. 

“This is more than a technicality,” Ley said. 

“The longer it takes for a ruling, the more it will delay existing and significant investment…the impact could be far-ranging.”

Best Laid Plans: Infographic outlining current EU production targets for lithium into 2030 (Rystad Energy)
Best Laid Plans: Infographic outlining current EU production targets for lithium into 2030 (Rystad Energy)

ASX-listed Vulcan Energy vocal on the move 

Vulcan Energy (ASX:VUL) chief executive Francis Wedin last week told the Fin Review that EU chemical regulator ECHA’s proposal is flawed given that it ignores scientific evidence suggesting a lesser health risk profile for lithium hydroxide. 

Wedin did not cite specifically which research the ECHA has overlooked. 

Vulcan Energy Resources operates in Germany where it intends to supply zero carbon lithium hydroxide to industry heavyweights Renault and LG Energy. 

The AFR’s Tom Richardson did infer the EU proposal was a partial factor in the decline of Vulcan’s share price over the last five months, though, the prevalence of larger macro trends cannot be overlooked. 

North Carolina based lithium producer Albemarle’s CFO told Reuters last week the company would likely need to close its German lithium processing facility if the move goes through. 

Ultimately, heightened permitting and compliance burdens would be the key issue.

However, Rystad Energy noted changing community perceptions on lithium following the proposed changes could hamper investment support. 

Vulcan Energy's three month charts compared to the materials index. Is sell-off season the only factor at play?
Vulcan Energy's three month charts compared to the materials index. Is sell-off season the only factor at play?

 

A number of companies at risk 

  • European Lithium (ASX:EUR), exploring for lithium in Austria, stands alongside Vulcan Energy in the firing line of the potential regulatory changes. 

  • European Metals Limited (ASX:EMH) which explores for lithium and tin in the Czech Republic is also sure to be watching closely. 

  • Balkan Mining and Minerals (ASX:BMM) which explores for lithium in Serbia is less directly exposed to risk but will likely be hit by higher costs surrounding permitting and compliance when it seeks to transport product through EU member states. 

 

Written By

Jonathon Davidson

Journalist

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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