A lithium mining start-up is to create a US-listed company in a blank-cheque merger as a severe shortage of the metal has become the most serious supply chain bottleneck in the rollout of electric vehicles.
European Lithium, which claims to have the region’s first fully licensed lithium mine with deposits in Austria, is to merge with Sizzle Acquisition, a special purpose acquisition company, to create Critical Metal.
European Lithium, which is already listed in Australia and will continue to trade there, will become the largest shareholder in Critical Metals, which will have a market capitalisation of $972mn.
Other companies have struggled to get permits to mine the metal in Europe, partly because of environmental concerns.
Europe’s setbacks in developing lithium supplies have left it largely reliant on China, which could pose problems for the region’s carmakers as they rush to secure local battery materials. China controls 60 per cent of global lithium processing.
The deal comes during a severe shortage of the metal with prices plateauing close to record highs of $70,000 a tonne, eight times their level at the start of 2021.
This followed electric vehicle sales in China powering ahead this year with the supply of the metal struggling to keep pace.
The problems over winning permits have held back lithium mining in Europe.
Rio Tinto’s Jadar project in Serbia had its exploration licences revoked, while Savannah Resources has yet to get environmental approval for a lithium development from authorities in Portugal.
Lithium is a vital element in electric vehicle batteries because it is lightweight, with demand expected to multiply several times over the next decade as the EV industry takes off.
“The need for additional battery-grade lithium in Europe will only continue to accelerate as demand for EVs continues to outstrip supply,” said Critical Metals’ executive chair Tony Sage.
The Wolfsberg site, located 270km south of Vienna, is expected to produce about 10,500 tonnes of lithium concentrate a year starting in 2025 — enough for 200,000 EVs. Lithium concentrate has to then be refined into chemicals that can be used in EV batteries.
The high lithium prices have been spurring a wave of activity to raise capital to develop mines. On Monday, mining solutions group Imerys said it was launching a lithium project in France that aims to produce 34,000 tonnes of lithium hydroxide a year from 2028.
European Lithium holds a memorandum of understanding with Germany’s BMW to pre-pay $15mn in return for lithium in the future. General Motors, Ford and Stellantis have taken the rare step of pre-financing mines and taking equity stakes in early stage mining groups.
