Infinity Lithium secures EU-backing for Spanish project

London — Australia-listed project developer Infinity Lithium has become the first developer to secure investment from the European Union, as the continent looks to secure a local electric vehicle supply chain.

Infinity is developing a mine and processing plant in San José, Spain, that will help feed European automakers' lithium requirements for EVs.

The package includes investment of a staged Eur800,000 ($900,238) to fund phase one of a pilot plant for the project. The funding is supplied by sustainable investment fund EIT InnoEnergy, which will also lead fundraising activities for phase two of the pilot plant, up to Eur2.4 million.

"In light of recent events [the fallout from coronavirus], it is clear that moving from a global to [more] regional market [is] key for industrial players and policy makers," Vincent Ledoux Pedailles, executive director at Infinity Lithium, told S&P Global Platts. "The [pandemic] will accentuate even more the need to develop an integrated and local EV supply chain in Europe, with direct access to lithium."

The European Battery Alliance, a division of the European Investment Bank, was created in 2017 and includes the European Commission and key industry stakeholders such as automakers, battery and cathode producers. The EBA's goal is to create a competitive and fully integrated battery manufacturing chain in Europe and avert a technological dependence on Asia.

"InnoEnergy will support and facilitate negotiations with European off-takers through the EBA network ... [it will also] support Infinity in obtaining the necessary environmental approvals and societal acceptance for the Project, and in enabling Infinity's strategic role in the European Lithium-Ion Battery value chain," the statement added.

EIB continues to invest

According to the EBA, some 25 battery factories could be operational across Europe by 2025. These factories will require lithium and other raw materials to create batteries for all kinds of end-products.

Thore Sekkenes, EBA's alliance director, industry, said: "Our goal is to make this project a success and lead Infinity to support the European battery automotive industry, by supplying lithium which can be produced locally, ethically and sustainably."

Europe is playing catch-up with China in the race to create an EV battery supply chain. Localized supply chains have been brought to the fore in the wake of the pandemic, and its resulting disruptions.

As such the EIB expects to increase its backing of battery-related projects to more than Eur1 billion ($1.09 billion) of financing in 2020, matching the entire fiscal support of the last decade.

There are a clutch of developers in Europe all looking to bring lithium projects online to meet the region's forecast growth in demand from the nascent EV market. Infinity is the first to get financial investment from InnoEnergy and the EBA.

EV sales in focus

S&P Global Platts Analytics forecasts 2020 EV sales at 1.97 million units, down 11% on the year. By 2040, it expects sales of 46.7 million EVs. Even prior to the pandemic, Platts Analytics expected EV sales in 2020 to decline slightly year on year, almost entirely on account of a broader slowdown in China.

European special chemicals and recycling company Umicore has agreed to a Eur125 million ($140 million) loan from the EIB to finance its battery cathode materials production site in Poland, the two sides said in a joint statement on June 15.

The cathode materials will be supplied to manufacturers of lithium-ion batteries, primarily for use in electric vehicles. The EIB loan will cover approximately half of the project costs in its initial phase, with around 350 full time jobs created.

Teresa Czerwińska, EIB VP overseeing operations in Poland, said: "The trend towards the electrification of the automotive industry is gaining ground and in this context it is important to develop a European capacity across the full value chain of EV battery production".