Electrical Equipment / Components & Telecoms

According to media reports, Albemarle, the world's largest lithium producer, said it would have to close its plant in Langelsheim, Germany if the European Union lists lithium as a hazardous material.

With its key role in the manufacture of electric vehicles, lithium has become an important commodity for achieving global carbon reduction targets and was included in the EU's list of critical raw materials in 2020.

However, the European Commission is currently evaluating a proposal by the European Chemicals Agency (EHCA) to classify lithium carbonate, lithium chloride and lithium hydroxide as materials hazardous to human health.

While the proposal does not directly ban lithium imports, if enacted into law, it would make processing, packaging and storage stricter, increasing costs for lithium processors.

A European Commission official confirmed that the agency was evaluating the proposal, but gave no further details. It is reported that the European Commission will hold a meeting from July 5 to 6 to discuss whether to list materials such as lithium as hazardous substances, and the final decision is expected to be made in late 2022 or early 2023.

Albemarle Chief Financial Officer Scott Tozier said the company would no longer be able to import its main raw material lithium chloride, putting the entire plant in Langelsheim at risk of closing. According to Tozier, the plant, which generates about $500 million in annual sales, would have a significant impact on Albemarle's operations if it were forced to close. The Langelsheim plant employs more than 600 people and accounts for 8 percent of Albemarle's projected net sales this year.

Industry insiders pointed out that if lithium is listed as a dangerous substance, it will add an additional burden to the production, use and recycling of lithium chemicals for batteries in Europe.

Europe is committed to building secure and independent supply chains, thereby reducing reliance on foreign countries. However, Tozier warned that the bill would hinder the localisation of the EU battery supply chain, with future battery recycling and cathode manufacturing moving out of the EU. Not only is Albemarle unable to process lithium locally, any EU lithium raw material has to be exported outside the EU to make the cathode.

The European Commission previously predicted that by 2030, European demand for lithium will be 18 times that of 2020, and that figure will grow to 60 times by 2050.