Stellantis invests €50mn in lithium start-up to secure car battery metals

Stellantis will build a € 50 million stake in Australian startup Vulcan Energy Resources as it seeks to produce lithium from deposits in Germany and become the first European carmaker to make a significant direct investment in the production of batteries for batteries.

The move comes when automakers have to deal with rising prices of key materials like cobalt, nickel and lithium, which adds pressure on the profitability of electric vehicles.

“Making this strategic investment in a leading lithium company will help us create a durable and sustainable value chain for the production of our European electric vehicle batteries,” said Stellantis boss Carlos Tavares.

The group, which includes the Fiat and Peugeot brands, plans to sell a total of 5 million electric cars worldwide by 2030.

Stalantis’ investment will make it the second-largest shareholder in Vulcan after founder and CEO Francis and Dean. The company was also supported by a group owned by Australian billionaire Gina Reinhart.

Vulcan has received eight exploration licenses in the Upper Rhine Valley in Germany, where it hopes to produce lithium from geothermal brines and purchased a facility at Innsheim with an existing production license last year. It also has a site search license in the Monte Sabatini volcanic area near Rome.

The company plans to start commercial shipments of lithium by the middle of the decade, subject to further approvals from local authorities in Germany and amid opposition from some residents near its sites.

Vulcan shares – which are traded in both Australia and Frankfurt – fell more than 50% this year, as part of a wider sale in the market, after soaring in 2021.

Several other automakers, including Volkswagen and Renault, have signed purchase deals with Vulcan, but these have not included upfront investments. The company uses a technique known as direct lithium extraction that separates the metal from geothermal brines.

BMW invested last year in a rival company, Lilac Solutions, which claims it is able to efficiently produce lithium from salt salts. The company has not disclosed how much it has spent on the start-up, but the documents indicate that the deal is worth a small portion of the deal made by Stalantis.

Automakers, hit by a continuing shortage of semiconductors and key components, are increasingly considering investing in technology and commodity companies to avoid bottlenecks in supply after decades of relying on contractors for materials and parts.

Tesla boss Elon Musk in May said at a Financial Times conference that it was “out of the question” for his company to acquire a mining group.

“It’s not that we want to buy mining companies, but if that’s the only way to speed up the transition” to electric vehicles, the possibility was on the horizon, he said.

However, such an acquisition would only make sense if Tesla had been able to change the route of this mining company, he added.

The price of lithium hydroxide in battery grade has risen sharply. It is currently trading at $ 75 per kilogram, according to a Fastmarkets price estimate, a 400 percent increase over the period a year ago.

Direct lithium extraction (DLE) differs from conventional evaporation-based processes. Proponents say it has higher recovery rates and stronger environmental characteristics.

Rio Tinto agreed last year to pay $ 825 million for Salar del Rincon, a DLE project in Argentina, and said it has the potential to significantly increase lithium returns compared to solar evaporator pools.

However, not everyone is convinced that small mining companies can make technology work. Only Livent, a major lithium maker in the US, can boast of using DLE technology on a commercial scale.

Stellantis invests €50mn in lithium start-up to secure car battery metals Source link Stellantis invests €50mn in lithium start-up to secure car battery metals

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