Green Lithium this week selected the site for what could be the UK's first lithium refinery — in Teesside — but it remains to be seen which operational model will take precedent as several companies push to assert themselves as the archetype UK lithium supplier.
The UK will need its own source of battery materials under the EU trade deal's rules of origin requirements, which stipulates a certain percentage of a finished good such as a car must contain products either "wholly obtained" or "sufficiently worked and processed" in the UK. This presents a huge opportunity for lithium companies, but a significant risk to the UK car industry.
Refining vs mining
Both mining and refining lithium have been put forward by lithium start-ups in the UK. Each has advantages, but also key challenges — both in terms of operations and attracting investment.
Green Lithium's refinery project allows for flexibility and is a proven model in China, but it exposes the company to market forces, especially feedstock prices. The company is hoping to hedge that risk through its partnership with global trading firm Trafigura.
"Fulfilling this vision requires the right supply chain and investment partners. In Trafigura, we have found the perfect match in a company that not only has vast experience and expertise in the battery supply chain, but that is also willing to make a key equity investment to support Green Lithium in achieving its project objectives," Green Lithium chief executive Sean Sargent said.
Even with Trafigura on board, the squeeze on spodumene prices is a cause for concern. Prices for spodumene are currently at a record high of $5,750-5,900/t cif China, up from just under $5,000/t when Argus launched the assessment on 17 May.
Another project hoping to capitalise on the UK's resources is Cornish Lithium, which has taken a different approach. Its geothermal brine extraction process is proven in theory, but there are no commercial projects of this type in operation.
Cornish Lithium chief executive Jeremy Wrathall says the UK needs to mine its own material for the supply chain to work. "In my view, the best model for a successful lithium supply chain has to start with the raw material itself. The UK is lucky enough to have deposits of the raw materials — in a country that is familiar with mining — and should therefore try and exploit them," he said. He also posed a critical question for UK policy makers: "When push comes to shove, will there be any material left for the UK after China, the US and Europe have locked up all the brine and all the spodumene?"
Mining in the UK is also plagued by permitting difficulties and regular protests, although as a lithium project, Cornish might not draw the ire of environmental activists, given lithium's essential role in the transition away from fossil fuels.
What form of lithium?
Another question is what form of lithium should be offered to the market. Green Lithium is allowing for flexibility in its refinery plan, and chief executive Sean Sargent said it can produce up to 10pc of its offtake as carbonate, with the option of eventually changing an entire production line towards the material.
"We still think there's some uncertainty in the market. As OEMs [original equipment manufacturers] are waking up to the reality that hydroxide is going to be in too short supply, we're seeing a few of them saying they will stick to lithium-iron-phosphate (LFP) batteries. They use carbonate, but then the problem is you're then directly competing with the Chinese."
As the market moves towards solid-state batteries further on in the decade, lithium carbonate will be the product of choice for that market too, although much of the capacity being built out in Europe right now is for nickel-cobalt-manganese (NCM) batteries, which take hydroxide as a feedstock.
"I'm pretty confident you could produce 50,000t of either and the market will be big enough for it. It's about having the option to exploit whatever is getting the best price within the market," Sargent said.
Tees Valley Lithium, which also has plans to develop a refinery based in northeast England, plans to produce hydroxide from lithium sulphate, a unique approach to processing lithium chemicals and a European first.
"It is unclear which is the best product at present. Carbonate has a better shelf-life and is easier to produce and transport, but hydroxide is a premium product for high-end battery chemistries. We can produce either product on site in Cornwall," Cornish Lithium's Wrathall said, adding it will depend on the kind of cars being produced in the UK.
Other forms of feed are available, and these are not widely talked about in the UK market. Minerals like amblygonite and lepidolite, which have been found in deposits in southern and western Africa, are increasingly touted by some trading companies as an alternative to spodumene.
Challenging market forces
The challenges facing Britishvolt threatened to upend the UK battery industry last week, casting doubt on whether the northeast can become a hub for battery development. But industry figures still talk up the benefits of the region.
"Britishvolt was just a case of bad timing. Even if it's not Britishvolt, and giving them the benefit of the doubt it still might be, someone will develop that site in Blythe," Sargent said.
Another source at a developing lithium producer in the region said the chaos of the last few weeks had "made it harder to attract inward investment into UK projects" but added that stability under Rishi Sunak should boost the industry.
"I believe that current market conditions [war in Ukraine and high energy prices] have reminded investors that secure domestic supply of raw materials is an essential feature of any advanced economy," Wrathall said.
