Written evidence from Green Lithium Refining Limited (BEV0014)
Our Belief and Our Mission
Our belief:
“We at Green Lithium believe the electric revolution is fundamental to reducing the carbon emissions that contribute to global climate change”
Our mission:
“Green Lithium will accelerate the adoption of electric vehicles and sustainable energy storage by increasing the supply of low-carbon, battery-grade lithium hydroxide”
Table of Contents
Our Belief and Our Mission
Table of Contents
Green Lithium Company Introduction
1. Is there enough UK vehicle manufacturing demand in the UK to support gigafactories?
2. Will the UK have sufficient battery production supplies by 2025 and 2030 respectively to meet the government phase-out plans for petrol and diesel vehicles?
3. Is UK-based battery production necessary to support the manufacture of electric vehicles in the UK?
4. What are the risks to the UK automotive industry of not establishing sufficient battery manufacturing capacity in the UK?
5. What other domestic end uses for batteries would provide a market for UK battery production?
6. Does the UK have a sufficient supply of critical materials to support vehicle battery production?
7. How ready are UK vehicle producers for the EU-UK Trade and Cooperation Agreement (TCA) rules of origin (ROO) phasing in from 2024?
8. What can the UK learn from investment in other countries in the establishment of gigafactories?
9. Do we have the skills in the workforce required for the production of batteries? If not, what needs to be done?
10. Will the cost of UK batteries be competitive compared with batteries produced elsewhere?
11. What impact will the European Union’s proposed Carbon Border Adjustment Mechanism have on UK production?
Green Lithium Company Introduction
- The electric revolution is driving an increasing demand for lithium processing in the UK and across Europe. To help meet this requirement, Green Lithium is building one of Europe’s first large-scale merchant lithium refineries at PD Ports in Teesside. Operational from 2026, this substantial facility will play a crucial role in assuring an environmentally sustainable, home domiciled lithium supply chain to meet the expanding needs of the battery manufacturing and automotive sectors.
-
Securing the UK’s critical minerals supply chain
a) Currently, 89% of the world’s hard-rock lithium is processed in East Asia, where domestic demand is expected to outstrip production by 2030. Unchecked, UK industry’s continued reliance on international sources for its refined lithium chemical imports is rapidly becoming an economic risk, with national security implications given lithium’s growing importance to the UK’s strategic defence supply chain. Green Lithium’s investment in Teesside is intended to address this.
b) At full capacity, the Green Lithium refinery will deliver an annual production of 50,000 tonnes of low-carbon, battery-grade lithium chemicals that will help meet UK industry’s growing demand and provide an assured supply to the UK’s allies and trading partners in Europe.
c) As a merchant refinery, Green Lithium has flexibility of feedstock, able to process lithium carbonate, lithium sulphate and spodumene from a range of international suppliers. This diversity will provide additional resilience to the UK supply. For the next decade, spodumene will be the fastest growing source of supply and our primary focus. Together with our partner Trafigura, we will source spodumene from mines in Australia, Africa, North America and, eventually, Europe.
- Growing the UK’s green economy
d) 
The construction of the refinery will help drive the UK’s levelling up agenda as well as support local and regional development on Teesside. Over 1,000 jobs in the local area will be created during the construction phase, and 250 full-time local and highly-skilled green jobs once in operation. Recognising the economic impact on the local and national economy, the UK Government has backed Green Lithium with a grant of over £600,000 through the Automotive Transformation Fund.
e) A major milestone for Green Lithium was reached in November 2022, when Business Secretary Grant Shapps visited the Teesside site to announce its location and the commencement of construction work ahead of commissioning in 2025.
f) “We’re backing companies, like Green Lithium here in Teesside, to grow the new, green industries across the UK, sparking jobs and growth for decades to come … allowing us to move quickly to secure our supply chains of critical minerals, as we know that geopolitical threats and global events beyond our control can severely impact the supply of key components that could delay the rollout of electric vehicles in the UK.” Rt Hon Grant Shapps MP, Secretary of State for Business, Energy and Industrial Strategy - 7 November 2022
-
Low-carbon refining – 80% lower CO2
g) Green Lithium is committed to transforming the refining process, historically a dirty supply chain component, by establishing leading ESG credentials, targeting net zero on Scope 1 and 2 emissions by 2035 whilst working with supply chain partners to minimise Scope 3 emissions and reducing its carbon footprint to significantly lower than existing international refineries. This will be achieved by integrating low-energy processes with renewable electricity and ensuring the refining plant can utilise hydrogen gas and is enabled by carbon capture. Additionally, there will be no broader environmental impact due to the refinery’s use of a non-acid leach process flowsheet with zero liquid discharge and no sulphates in its output.
h) Yes, although the question would be whether there is enough gigafactory capacity to support UK vehicle manufacturing demand. Based on UK vehicle production forecasts, UK vehicle battery demand is expected to reach 100 GWh by 2030. The current pipeline for domestic cell production remains limited with capacity in 2030 at around 30 GWh. This leaves the majority of UK vehicle production reliant on cell imports.
i) While there is no specific EV target for 2025, the UK is on track for more new car sales to be BEV than petrol and diesel combined. In December 2022, the share of BEV sales in the UK was nearly 35%. Including PHEV and hybrids, the share for December was around 65%.
j) The Advanced Propulsion Centre expects UK battery demand in 2025 to reach 27 GWh. Based on current gigafactory projections, less than 20% of this can be supplied domestically. See above for 2030 details. Under a 100% BEV scenario, demand rises to 130 GWh. While the pipeline of gigafactory projects currently does not get anywhere near this, there is still time for large gigafactory projects to be developed in the UK to meet this requirement if it occurs in 2035.
k) In a BEV, the battery pack is the most costly component and contributes significantly to the vehicle’s performance. It is also critical for automakers to have a secure and stable supply of cells. These are some of the factors that have driven battery makers and automakers to co-locate (Nissan & E-AESC in Sunderland), develop battery JVs (BlueOval SK joint venture between Ford and SKOn) or even automakers developing their own cell companies (VWs battery business, PowerCo). Without UK battery production, there is a high risk that large-scale automakers will shift production closer to battery production facilities.
l) There are no current or planned cathode manufacturing facilities in the UK; this is a critical part of the value chain that will be essential for UK supply chain security. We believe the building of the Green Lithium refinery will encourage cathode manufacturers to establish themselves in the UK, which would bridge the gap between the supply chain and support UK EV manufacturing.
m) As mentioned, the key risk is large-scale automotive vehicle production moving closer to battery hubs. This would result in major loss of jobs, skills and GDP contribution. With many new luxury EV entrants coming from outside of the UK, there is also a threat to the remaining luxury car production in the UK.
n) Europe is aggressively building out domestic battery capacity which will unlikely be able to meet its own requirement, let alone the needs of the UK. This could leave the UK automotive sector completely reliant on Chinese supply chains. An outcome that is clearly risky in the current geopolitical environment.
o) The main other end use in the UK would be for domestic and grid storage. Demand will be much smaller in GWh terms and therefore will be more difficult for battery makers to be competitive without producing at large scale. Typically, the cell types used for energy storage systems are low cost LFP chemistries, which China completely dominates and produces at a huge scale.
p) If the UK builds more gigafactories, there is greater incentive for the rest of the battery value chain to localise. Unfortunately, there are no major battery materials deposits located in the UK. It makes sense for the UK to focus on the refining level, where raw materials and recycled material can be processed into usable battery chemicals. This is where Green Lithium is positioned in the supply chain and will be able to support the UK with enough lithium for around 1 million EVs.
q) Critical minerals mining companies must see the UK as a cost competitive location for them to sell their materials to and have confidence that there will be no barriers for the processed material to then enter downstream battery sectors. Something that the US has now created through the introduction of its Inflation Reduction Act (IRA)
r) At Green Lithium, we have seen, first hand, how the US IRA has attracted investment in midstream battery chemical refineries. Their ability to attract tax credits of 10% of production costs over the life of the plant is seen as a huge operational benefit.
s) We believe that the UK has the ‘raw materials’ that can be developed into the skills needed for future midstream refineries. We believe that people with chemical process industry skills can be retrained in pyrometallurgy, hydrometallurgy and crystallisation to perform the roles we need.
t) In our case, the critical minerals we need for our feedstock dominate the operational expenditure, and these are common to any refinery that has to import raw materials. Although UK energy prices are high, we believe the UK is advanced in providing the renewable energy and hydrogen necessary to produce the low-carbon chemicals the markets will demand in the next few years. However, the IRA in the US provides tax credits that present an instant 10% reduction in OPEX that cannot be counteracted.
u) We believe that UK midstream refineries, like Green Lithium, that plan to produce low-carbon battery materials, will fare very well against others importing battery materials into Europe. To some extent, it will depend on how the CBAMs penalise imported production over domestic production to establish whether this becomes protectionist legislation.
Page 7/7