Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Top producer Albemarle risks shutting German plant if EU declares lithium a hazard

Published 06/07/2022, 11:10 AM
Updated 06/07/2022, 11:24 AM
© Reuters. FILE PHOTO: A sign at the approach road leads to Albemarle's lithium evaporation ponds at its facility in Silver Peak, Nevada, U.S., January 9, 2019. REUTERS/Ernest Scheyder

By Clara Denina and Pratima Desai

LONDON (Reuters) - Top lithium producer Albemarle (NYSE:ALB) Corp may have to shut its Langelsheim plant in Germany if the metal used in electric vehicle batteries is declared a hazardous material by the European Union, its finance chief told Reuters.

Lithium's pivotal role in electric vehicles makes it an important commodity in meeting global targets to cut carbon emissions, and it was added to the EU's list of critical raw materials in 2020.

However, the European Commission is currently assessing a proposal by the European Chemicals Agency (ECHA) to classify lithium carbonate, chloride and hydroxide as dangerous for human health.

That would result in a more restrictive regulatory framework for their use at a time when the EU is aiming to be self-sufficient in electric vehicle batteries by 2025.

The proposal doesn't ban lithium imports, but if legislated will add to costs for processors from more stringent rules controlling processing, packaging and storage.

"Albemarle would no longer be able to import our primary feedstock, lithium chloride, putting the entire (Langelsheim) facility in jeopardy of closure," said Chief Financial Officer Scott Tozier in an emailed statement.

"With sales of approximately $500 million annually, the economic impact to Albemarle from the potential closure would be significant," Tozier added.

A European Commission official confirmed it was assessing the proposal, but had no further comment.

EU member states are currently giving their views on the proposal to a committee which meets on July 5-6 to discuss chemicals including lithium that have been recommended for classification as dangerous. A final decision is expected at the end of 2022 or beginning of 2023.

The United States and Europe have accelerated efforts over the past two years to build secure and independent supply chains to cut reliance on China for key minerals used in electric vehicles, wind turbines and solar panels.

Tozier said the classification would "hinder the localisation of the EU battery supply chain, and instead move the process to a non-EU location, thereby creating the need to import".

"Future battery recycling and cathode manufacturing would move outside of the EU. Albemarle would not be able to convert materials locally, and any EU lithium raw materials would need to be exported to create cathodes."

Having produced lithium since 1921, the Langelsheim plant employs more than 600 people and accounts for 8% of New-York listed Albemarle's projected 2022 net sales.

© Reuters. FILE PHOTO: A sign at the approach road leads to Albemarle's lithium evaporation ponds at its facility in Silver Peak, Nevada, U.S., January 9, 2019. REUTERS/Ernest Scheyder

The European Commission has estimated Europe would need up to 18 times more lithium by 2030 than in 2020, and 60 times more by 2050.

"Classifying lithium as hazardous would create extra burdens on how lithium chemicals for batteries are produced, used and recycled in Europe," an industry source said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.