Trafigura funds development of UK’s first lithium refinery

Trafigura said it will fund the development of the UK’s first lithium factory for an undisclosed sum.

The group explained that the refinery, operated by domestic start-up Green Lithium, will produce battery-grade lithium chemicals for the EU electric vehicle and battery industries.

Under the agreement, the commodities giant will supply lithium feedstock an invest equity into the project’s development funding round.

“Green Lithium’s refinery will accelerate the adoption of electric vehicles and sustainable energy storage through the increased supply of low-carbon, battery-grade lithium chemicals – a key component of lithium-ion batteries,” said Green Lithium’s chief executive Sean Sargent.

“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.”

The latest arrangement is Trafigura’s first major deal in lithium, and represents a renewed emphasis in diversifying supply chains following Russia’s invasion of Ukraine and pandemic-driven instability.

The firm estimates more than 90 per cent of the world’s battery grade lithium is processed in Chinese refineries, with the country also being a major player cobalt and nickel.

The deal is also the latest in a series of investments to ramp up the production of batteries across Europe.

Anglo-Korean battery producer Eurocell announced in February it was developing a £600m gigafactory in Europe, while Volkswagen a month earlier has set up a venture to make the continent’s battery production self-sufficient.

In the UK, start-up Britishvolt secured a £40m funding from Glencore to build a major gigafactory in Northumberland, City PM reported.

Tesla chief executive and world’s richest man Elon Musk has hinted that his company could become involved in lithium mining directly and at scale to ease rising costs in the key material.

“Price of lithium has gone to insane levels,” Musk tweeted on 8 April. “There is no shortage of the element itself, as lithium is almost everywhere on Earth, but pace of extraction/refinement is slow.”

The breakthrough in electric cars into mainstream markets has seen the price of lithium hydroxide spike 140 per cent this year to more than $65,000 a tonne, according to Benchmark Minerals.