Zinnwald: Europe's first major lithium project enters feasibility phase

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METALS & MINING

Europe's first major lithium project has entered the feasibility stage as EU industry leaders and officials look to eventually move the bloc's automotive and electronics sectors away from chaotic supply chains and reliance on East Asian suppliers.

Located about 35 km outside of Dresden on the German-Czech border, Zinnwald Lithium acquired the site at the end of 2020 for around €8.8 million. The project has received funding from several sources as EU industry continues to suffer under the ongoing semiconductor shortage.

Read more: Siemens to build one of Europe’s most powerful battery storage facilities

With an estimated net present value (NPV) of around €428 million, the site should provide a stepping stone for EU-sourced lithium for chips and batteries and test the waters for future projects located within the EU.

Originally specialising in the production of lithium fluoride for use in electrolytes for lithium-ion batteries, the project was driven by similar end-market drivers as the rest of the lithium space but with a slightly more specialised product.

The company is set to conduct a new feasibility study on the back of a similar one conducted in 2019 by the site's original owners.

Mining has long been a major sector in this part of Germany, which means that much of the infrastructure, including local support schemes, is already in place. Chemicals are also a big part of German industry, which can help in the refinement of lithium by-products.

"We are currently doing some test work to see if we can expand the capabilities of the project to include lithium hydroxide - a more conventional product but still orientated towards the battery space," Anton du Plessis, Zinnwald Lithium's CEO told Industry Europe. "We are hoping to take the opportunity to plug a market gap as demand for lithium has exploded on the back of electric vehicles and stationary storage."

Along with cobalt, lithium is one of the main materials required in the manufacturing of lithium-ion batteries, which are an essential component of electric vehicles. Australia is by far the world's largest supplier of lithium, followed by Chile.

There are several issues, from child labour to environmental destruction, associated with the lithium and cobalt mining that is necessary for battery production.

Read more: 5 tech giants sued over use of child labour in Congolese cobalt mines

Production within the European Union, which has far stricter labour laws, could stand to decrease the ethical concerns arising from the mining sector.

Securing a European lithium source, along with the increased push for a European chip manufacturing sector may also help mitigate any future supply chain issues or offer a buffer against future chip shortages.

"Europe is really starting to accelerate on these types of projects, driven both politically and by the automakers who are finally seeing the writing on the wall in that the industry is making this shift. There has been a lot of noise around making the supply chains more local and sustainable owing to the dangers of a global attenuated supply that's been devastated by the pandemic and people are nervous about relying on suppliers from East Asia," Du Plessis said.

"Currently there is around 30 GWh of battery manufacturing capacity in Europe and current expectations are for that to ramp up to around 700 GWh by the end of the decade.

"To put that in perspective, per kWh, you use about half a kilo of lithium carbonate equivalent. Current estimates suggest in order to meet these goals Europe will have to have the equivalent of the entire world's current lithium production," he added.

The European Union is currently focused on delivering the EU Green Deal, which will see it aim to become completely carbon-neutral by 2050. The decarbonisation of most industry sectors, as well as a push towards green engines, is considered a major part of these plans.

It also recently announced the "Fit for 55" goals which will tackle carbon emissions more directly.

Read more: EU lays out "Fit for 55" goals to cut carbon emissions

This will also mean Brussels will wish to ensure all mining projects are undertaken in an "environmentally friendly or socially-conscious way."

"It's far easier to sign-off on these projects when you can guarantee from the off that it will be conducted in an ethical manner," Du Plessis said.

"Keeping it local," as he puts it should also do something to alleviate carbon emissions from transport. Logistics and volumes play a large role in lithium mining.

Du Plessis expects Zinnwald to produce roughly 8,000-10,000 tonnes of end-product lithium annually and with the likelihood of everything being kept relatively local, the overall volumes decrease significantly. Contrasting this with an Australian miner shipping to China, who would then export globally, the overall emissions will be significantly lower, he revealed.

"Even though this is hard-rock mining, the process involves creating a material called Zinnwaldite - named after the area it comes from - is less energy-intensive than other lithium processes, such as spodumene, as it requires one less pyrometallurgical step than other processes," he said.

"Other ways of saving on emissions is the use of natural gases in kilns as opposed to the coal-firing used in a majority of lithium plants," he added. "While we may not be as environmentally friendly as brine producers in the Atacama - who often use solar energy for evaporation - we have the advantage of not also not having water supply or pollution issues."

"There are aspects of our operation were looking into to see where we can improve those numbers again, such as electric mining fleets as greener projects will be more attractive to the EU and its member states."

Zinnwald Lithium's current estimates should mean the project commenced operations at some point in the mid-2020s, which should put it in line to meet the EU's ban on "unsustainable" batteries, set to come into effect in 2027. Part of the post-Brexit trade deal with the UK also indicates automakers should source all their batteries from within the EU or UK by 2027 or face heavy fines.

Once all the permit stage is completed, the actual construction is relatively quick, with an estimated 24-months before operations can commence.

Total construction costs are expected to be around €159 million, with €2 million in additional capital expenditure required for the production of lithium carbonate.

"I would be very surprised, given our location for anyone outside of Europe to invest heavily into the site and our expectations are that it will be primarily shipped and used locally.

"With lithium in its final form, a lot of the volume has gone, so it is relatively easy to ship around should it come to that. However, I think being a local supplier just makes sense."

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