Lithium is among a basket of metals viewed as essential to the energy transition. Yet Europe and the US mine and process remarkably few of these resources, relying often on countries such as China for their supply.
The EU and the US have both introduced incentives to encourage greater self-sufficiency, yet there is often staunch resistance to developing new mines.
Employee looking at jadarite sample
Europe certainly has plenty of lithium in the ground. The largest deposit is in Jadar, Serbia, where boron and lithium occur in a clay mineral (jadarite) that Rio Tinto hopes to mine. This will reportedly be more economical to mine than the hard-rock spodumene deposits in Australia, although more expensive than brine extraction, as employed in South America.
With electric vehicles (EVs) already being built in Serbia, and plans for a battery factory, the mine could allow the country to develop an enviable supply chain. But Rio Tinto’s plans have been dogged by controversy and environmental concerns.
‘The paradox is that we have lithium deposits, we need lithium badly to drive our clean mobility revolution, but we seem totally incapable of converting deposits into functioning mines,’ says Peter Tom Jones, director of the KU Leuven Institute for Sustainable Metals and Minerals in Belgium.
There are signs of a slight shift. The US recently approved a new lithium mine in Rhyolite Ridge, Nevada, the first under the Biden administration. Another project is be developed at nearby Thacker Pass. ‘There is clearly more focus on mining in the US than there was 10 to 15 year ago,’ says Rod Eggert, mineral economist at the Colorado School of Mines in Golden, US.
In May 2024, the Critical Raw Materials Act was proposed by the EU. Last July, the EU and Serbia signed a strategic partnership agreement on raw materials for batteries and electric vehicles. ’That one mine in Serbia could provide sufficient lithium for one million cars each year for 45 years,’ says Jones. ‘Opening it could mitigate a big part of Europe’s lithium problem.’
There are also lithium deposits in Portugal, which currently produces relatively small amounts, but could generate much more. Another mine is opening in Finland and there are promising rock deposits in Spain, Portugal and on the Czech-German border.
Jadarite
A spike in the price of battery-grade lithium to almost $80,000 per tonne in 2022 caused a surge of interest in mining. But from mid-2023, prices began falling back to previous levels. and are hovering around $10,000 per tonne.
‘The price spike significantly incentivised a lot of new projects, but that brought new supply and brought the price down,’ says Thomas Chandler, lithium analyst at SFA Oxford, a market consultancy firm. Meanwhile, sales of EVs in Europe and North America have disappointed investors, dampening their expectations of demand growth for lithium.
China’s integration of lithium processing, battery manufacturing and EV production means that it can absorb higher costs at early stages of the supply chain. Much of its own lithium mining is from lepidolite, a rock ore that is relatively expensive to process. But China also imports, processes and exports large amounts of lithium from producers around the world, giving it significant market influence and pricing power. ‘The lithium price is low because of Chinese oversupply of cheap lithium,’ says Jones.
Geologically we still have a high potential for metal mining in Europe, but it will be difficult because we don’t have an industry anymore
With lower prices, analysts are expecting some consolidation. In October, Rio Tinto agreed to pay $6.7 billion (£5.3 billion) for US company Arcadium Lithium, promoting the Anglo-Australian miner to a major producer of lithium. The deal includes hard rock and brine pond mines in South America and Australia, with different extraction and refining processes, as well as lithium chemicals manufacturing. ‘Rio Tinto had been trying to enter the market for a few years, but now is a good time to buy lithium assets,’ says Chandler. ‘We’ve seen a lot of offers for smaller companies that haven’t gone anywhere, but there’s an opportunity to pounce if you’re a larger company,’ he adds.
Underpinning such interest is the expected upward trajectory lithium demand, driven especially by EV batteries. Total demand will rise from 165 kilotonnes in 2023 to 400-700kt in 2030 and up to 1700kt in 2040 (depending on policy scenarios), according to a minerals outlook report from the International Energy Agency (IEA).
Short-term supply is expected to keep up with demand, but further mining and processing will be required medium to long term. The IEA report also notes that its price volatility is likely to be higher than other focus minerals, with substantial geopolitical risks, since 85% of processing is concentrated in China, Argentina and Chile.
To mitigate those risks, Europe and the US have adopted a two-pronged approach. First is to encourage more domestic mining and processing, such as with the Inflation Reduction Act in the US, with tax incentives for green technologies recently expanded. Second is to diversify supply, for example with the Minerals Security Partnership, a collaboration of 14 countries and the EU to boost investment in critical mineral supply chains.
The Serbian mine project has raised various concerns over environmental contamination, which are disputed by Rio Tinto. Domestic politics is fiercely divided over the issue, with the government and president supporting and the opposition against.
Serbia protest
Jones has visited the Jadar area of Serbia, where he spoke to opponents and others about the proposed mine for a documentary he is presenting. ‘Disinformation is gargantuan and frightening there,’ he says. ‘Educated Serbs believe that Rio Tinto is going to poison the water of 80 million people.’ He adds that newspapers invariably show an open pit mine when reporting on it (the proposed mine will be underground). There have also been claims that tailings will be left in a flood-prone area and that jadarite is radioactive.
Jochen Kolb, an economic geologist at Karlsruhe Institute of Technology in Germany, says there has been opposition to proposed mines elsewhere in Europe, such as the spodumene San José deposit in western Spain and Barroso in Portugal.
There is also a knowledge deficit, he says. ‘Geologically we still have a high potential for metal mining in Europe, but it will be difficult because we don’t have an industry anymore.’ Some countries such as Germany essentially stopped mineral exploration in the 1980s if not earlier. ‘In Germany, we said we don’t want this anymore,’ Kolb adds. ‘It is dangerous. It is dirty. We can import cheaply from the world market.’ Companies can also be deterred by the patchwork of regulations in different countries across Europe, which they view as difficult to navigate.
The energy transition has shifted attitudes to critical materials, at least at an official level. Yet in some regions of Europe, such as the Nordics, mining continued and new activities may be welcomed. Finland operates nickel, zinc and copper mines, as well as cobalt and platinum-group metals. It also is developing the Keliber lithium project to produce battery-grade lithium hydroxide from spodumene.
Cornish Lithium is targeting granite with a silicate mineral (zinnwaldite) rich in lithium in the southwest of England. Its Trelavour project crushes granite to extract this lithium, with a demo plant having just opened. From 2027, it hopes to produce 10,000 tonnes of lithium hydroxide a year.
‘Although this granite is enriched in lithium, compared to other granites around the world, only certain pockets are enriched enough to make it viable to extract,’ says Lucy Crane, a geologist a Cornish Lithium. The demo site is actually a facility previously mined for China clay, and with the area’s long history of mining, there has been little public opposition.
Other companies are targeting similar granite deposits on the German-Czech border, led by Zinnwald Lithium.
Cornish Lithium is also planning to drill boreholes to pump hot brine rich in lithium to the surface. The plan is to sell some of the heat to housing schemes or industries. ‘On the geothermal side of things, we are probably 2–3 years away from commercial production,’ says Crane. ‘We’ve drilled six exploration boreholes, 1–2km down.’
There is also interest in hot brines in Germany and France. Vulcan Energy in the Upper Rhine Valley began extracting lithium from hot brine in a pilot facility in 2021. Earlier this year it began to produce lithium chloride and in November opened a pilot plant to convert this to battery-grade lithium hydroxide. ‘Early calculations show [brines] will be cheaper than hard rock mines but more expensive than mining salars [salt flats in South America],’ says Kolb, who has worked on the extraction process.
Not-so-rare earth supply restrictions
There are other resources critical for the green transition where supplies are highly concentrated geographically. The global demand for rare earth elements (REEs) – used in magnets, fibre optic cables and displays, etc – almost doubled between 2015 and 2023 to reach 93kt, according to the IEA outlook report for 2024. Three producers accounted for 85% in 2023, with China mining 63% of REEs. China’s dominance is even stronger in refining, accounting for 92% of global output. ‘Chinese magnet companies account for some 90% of the rare earth permanent magnets,’ says Eggert.
‘For both lithium and rare earths, there are significant known resources outside of China,’ says Eggert. But new mines and processing capacity could take years to establish. ‘The rare earths mirror the lithium situation. We have some nice deposits in Europe, but no operational rare earth mines,’ says Jones.
Extraction of some rare earths is complicated by the presence of radioactive elements such as uranium and thorium in their ores. And those complications are not all technical – a potential rare earth mining project in Greenland fell foul of political decisions to ban all uranium mining. The fastest growth in refined production of magnet rare earths is in Malaysia, boosting its global output from 5% to 12% by 2030, according to the IEA. There’s little sign that Europe or North America will be significant players in mining or processing anytime soon.
A variety of important minor metals are only mined as byproducts from mining and metallurgical operations: gallium with aluminium, indium with platinum, and germanium with zinc. ’Iridium is a really minor byproduct of platinum. Nobody would open an iridium mine,’ says Eggert.
Copper conundrum
Copper presents an even bigger concern for Western countries worried about securing supplies of critical metals. As electrification progresses, demand is set to soar. Today the top producers are Chile (23%), the Democratic Republic of Congo (14%) and Peru (11%). Copper refining is more restricted, with China holding a 45% market share.
Anxiety over copper focuses on overall production, however. ‘The concern with copper is not a lack of supply chain diversity today,’ says Eggert. ‘But will its production grow sufficiently to meet increased demand over the longer term in ways that are environmentally and socially sustainable.’
One obvious advance would be for European countries to mine more of the metals that they need. ‘The transition we are going through needs more metals,’ says Kolb. ‘An electric car needs more than a conventional car. An offshore wind turbine needs far more per megawatt than a gas turbine.’ Yet, as in Serbia, there are disagreements over managing the environmental impact of new mines.
As societies, Europe and North America will need to fall back in love with mining to at least contribute some supplies. ‘We should have a base load of every single metal that we use in Europe,’ says Kolb. Otherwise Europe’s ability to reach carbon emission targets may end up dependent on countries such as China, at a time when geopolitical tensions are rising.