What we learned from day one of the Alkeemia Battery Forum

With European automakers and battery component manufacturers in attendance, delegates heard that issues affecting Europe’s green transition can be found from multiple angles.

“Europe is caught between a rock and a hard place at the moment. There is the economic attraction of the US Inflation Reduction Act taking investment away from Europe, but also imports of cheaper electric vehicles from China taking consumer market share, too,” Nikolas Oehl-Schalla, consultant for research consultancy firm VDI/VDE-IT, said in a presentation.

“The battery industry in Europe must grow faster than the global market, [and have] better alignment of regulation, as it is fragmented by different member countries; industrial policy and the allocation of funds are all needed,” he added.

The US Inflation Reduction Act (IRA) offers consumers financial incentives of up to $7,500 per vehicle providing the vehicle meets certain requirements. One requirement is for 50% of the value of the components contained within the battery to be manufactured or assembled in North America. This percentage requirement will increase to 100% after December 31, 2028.

As a result, an ‘issue’ has been created according to Oehl-Schalla whereby European automakers will have to consider importing US-manufactured battery components or relocating operations to the US for their produced vehicles to be eligible for the tax credit, instead of exporting the finished vehicle to the US.

Michael Schmidt, senior analyst at the German Mineral Resource Agency, presented a European perspective on the lithium market, and spoke on the differences between the two policies.

“You cannot compare the CRMA against the IRA, because one is a regulatory rulebook and the other is pure money,” he told delegates.

One European battery material manufacturer said on the sidelines of the conference:”The US and Canada have sent our company offers to build a factory there — they are more aggressive in getting projects set up. France has moved quickly with their offer, but Germany is much slower… European policy on these projects is a hurdle sometimes.”

Speaking about future lithium production in Europe, Schmidt felt the trade bloc has its part to play in developing a separate supply chain.

“The lithium market is underfinanced by $50 billion-70 billion, at a time when financing is very expensive; we won’t be self-sufficient in lithium production in Europe, but we can lower reliance on imports,” Schmidt told delegates.

China’s dominance in the refining and export of materials deemed critical to energy transition supply chains was another topic that presenters offered their take on.

“We’re seeing overcapacity in China – it’s an issue. Some lithium producers there are running utilization rates of 50% – I don’t see how Europe can compete on a capacity basis with China’s low price and high-quality product, they will flood the market,” Schmidt said.

Graphite is another critical material in which China features heavily in the supply of, accounting for 60% of global natural flake supply, 99% of uncoated spherical graphite and over 90% of natural anode, according to Fastmarkets’ battery raw materials research.

Graphite is a vital material in the production of anodes for battery manufacturing.

China moved to impose export controls on certain graphite-related products in December 2023, which has resulted in large declines in export figures for January-February trade data.

The imposing of the export controls is a reason for Europe to increase synthetic graphite production in a bid to reduce its reliance on China, delegates heard. Synthetic graphite was added into the CRMA by the European Commission in November 2023.

“Synthetic graphite has better charging performance over natural graphite, but it comes at a cost of [carbon dioxide] emissions and high electricity usage during production… if we can make synthetic production sustainable it will have a big impact,” Laure Latour, business developer at Tokai COBEX, told delegates.

“There is a process already for this, but the product has a price premium attached because of the technology. This premium is a fight to get consumers to agree to,” she said.

Other companies have also recognized the need for European supply chains to reduce their reliance on China following the CRMA.

Alkeemia, a European fluorochemicals producer, presented plans to localize graphite purification away from China using its own produced hydrofluoric acid (HF), as well as collecting and recycling spent HF after it had been used by their consumers.

“HF is the all-in-one reactant to purify graphite, but it’s a challenging industry to get into because of strict policy guidelines for storage, handling and disposing of it,” Yoshi Uenishi, chief strategy officer of Alkeemia, told delegates in a presentation.

“I know some graphite miners have tried to integrate the process and vertical supply chain into their operations, but the permit issues of HF are a real hurdle. We have those necessary permits, so expansion is possible for us,” he said.