Europe Moves to Revive Mining to Cut Reliance on China
INSHEIM, Germany—Near the Rhine river in this part of western Germany, little indicates that beneath the picturesque villages, vineyards and rolling hills there lies enough lithium to make millions of batteries for electric vehicles.
Vulcan Energy Resources Ltd.
, an Australian-German mining company, recently began extracting lithium from a mix of scalding water, minerals and metals almost 2 miles underground. The same hot brine has for years powered a geothermal electricity station, which Vulcan bought. The company has big expansion plans in the valley, backed by contracts to supply the auto industry.
Ventures such as Vulcan’s could be a big step forward for Europe, the only continent where the mining of minerals and metals declined in the first two decades of this century, according to World Mining Data 2022, an industry report published by the Austrian government. European production fell by a third, compared with a doubling in Asia and a 145% increase in Australia.
Mining lithium, copper and rare-earth elements—which are used in EV batteries, laptops, mobile phones and renewable-energy infrastructure such as wind turbines—took on new urgency last year after Russia invaded Ukraine. Moscow cut off the supply of natural gas to EU countries, highlighting the bloc’s reliance on imports for a host of other critical raw materials.
“If Europe doesn’t become more self-sufficient in minerals and metals, it might soon find itself at the mercy of foreign governments, like what happened with Russian gas,” said Cris Moreno, Vulcan’s deputy chief executive.
SHARE YOUR THOUGHTS
Should Europe double down on mining? Why or why not? Join the conversation below.
That prospect is pushing the European Union to jump-start mining, as is the expected surge in demand for key minerals and metals as the world’s major economies build large EV battery plants and renewable energy infrastructure.
The EU’s executive, the European Commission, proposed new rules on Thursday that would speed up the granting of permits for new mines and set up a central EU purchasing agency for key minerals. EU member states must approve the proposal.
Mining’s environmental impact has long been the industry’s biggest obstacle in Europe.
Last year, demonstrations led Serbia to revoke the permits for a large lithium-mining project run by
PLC, one of the world’s biggest mining companies. In Portugal, which has Europe’s largest lithium reserves according to the U.S. Geological Survey, London-based mining company
PLC is being sued by a community group for allegedly improperly appropriating land, and final approval has been delayed for an open-pit lithium mine the company is developing.
Lithium is mostly mined using techniques that have a significant environmental impact. In Australia, which accounts for about half of worldwide lithium production, according to the U.S. Geological Survey, companies use open-pit mines that disfigure the landscape, require lots of fossil fuels and can pollute water sources.
In Chile, the world’s second-biggest lithium producer, vast amounts of lithium-rich brine is pumped out of the ground and into large pools where it evaporates, leaving the lithium. The process depletes the groundwater in an arid part of South America inhabited by indigenous communities.
Vulcan is using a different, relatively new technique to extract lithium that it says reduces the environmental harm by pumping the brine back underground after isolating the lithium—while also using the hot liquid to generate electricity for the production process as well as for local residents.
Other companies around Europe are experimenting with the same technique. Vulcan aims to be the biggest in the region and forecasts that by 2027 it will be extracting enough at Insheim and in other spots along the northern Rhine valley to make a million EV batteries a year. The company must still complete the permitting process in most of the new locations where it will be producing geothermal energy and extracting lithium.
Vulcan began using Insheim as a pilot project in 2021 in an effort to show that its method works. Its next test is to scale up production in the area. The company is building a much bigger lithium-extraction facility at another geothermal power plant 3 miles from Insheim. If successful, the new facility would prove the company’s assertion that it can scale up its lithium-extraction technique.
Vulcan already has multiyear agreements to sell lithium to
NV and other car makers, and to South Korean battery manufacturer
LG Energy Solution Ltd.
If all European lithium projects under consideration were approved, they could supply about half of the continent’s demand in 2030, compared with zero production today, according to a study published last year by KU Leuven university in Belgium and commissioned by an industry association. Production of nickel, copper and some rare-earth elements could also be significantly increased, the study said.
But there is a limit to how far European production can replace imports of critical materials, even with industry-friendly legislation, said Sabrin Chowdhury, the head of commodities research at Fitch Solutions. Cobalt, for example, is mined in the region only in Russia and Finland, and there aren’t new projects in other European countries in the pipeline, she said.
Mining in Europe atrophied in recent years partly because cheaper imports squeezed out local production. Europe’s last magnesium mines closed at the beginning of the century, succumbing to Chinese competitors that European mining companies said were selling below cost. Almost all the magnesium used in Europe now comes from China.
The slow process of obtaining permits, in which companies can invest hundreds of millions of euros and years of effort only to have a mining project canceled, is one of the biggest drags on the industry, said Rolf Kuby, director general of Euromines, an industry lobby. He praised the EU Commission’s recent proposal to streamline the process.
Earlier this year, Sweden discovered a large deposit of rare-earth elements, which like lithium are critical for EV batteries and renewable-energy infrastructure. But it could take as long as 15 years for the cache to become commercially available. The U.S. also has onerous permitting processes, but the waiting period is usually shorter than in Europe, according to industry analysts.
“We need environmental studies, but they need to be done faster and important projects should be fast-tracked,” said Mr. Kuby.
In Insheim, the pushback against Vulcan’s expansion plan has been relatively limited compared with the resistance traditional mining projects have run into in Europe and elsewhere.
Insheim’s mayor, said some people in the town are afraid of the risk that drilling new wells for geothermal plants could cause earthquakes, but the majority of his 2,000 citizens look favorably on Vulcan’s plant because it hasn’t had an impact on the local environment and it supplies them with electricity generated from a renewable resource.
“Extracting lithium from geothermal brine and then pumping it back underground has so many advantages from an environmental point of view, but it hasn’t been proven yet that the process can be scaled up to an industrial level,” said Valentin Goldberg, a research associate at Karlsruhe Institute of Technology who has written reports on geothermal lithium.
Vulcan is talking to investors to raise 1.5 billion euros in capital, equivalent to around $1.6 billion and more than double its market capitalization, as it seeks to complete the bigger facility near Insheim and develop other sites needed to reach its production target.
Breaking dependence on imports is hard even for Europe’s newest lithium projects. The industrial solvents used for separating lithium from geothermal brine are mostly made in China. Vulcan is developing its own solvent in a lab in Karlsruhe near the Insheim plant.
“We are optimizing the whole process and removing supply uncertainties,” said Angela Digennaro, Vulcan’s head of research and development, as she held up a plastic bottle of powdery lithium.
Write to Eric Sylvers at [email protected]
This is not a CAPTIS article. Originally, it was published here.