EU proposal to call lithium toxic may affect refining projects

BY YUSUF KHAN | UPDATED 10月 18, 2022 05:00 午前 EDT

The metal was found to be potentially toxic to pregnant women in a study

A European Union proposal to regulate the production and use of lithium is drawing concern that it could inhibit the development of supply chains for battery metals outside of Asia and create obstacles to the bloc’s climate and energy goals.

The European Commission, the EU’s executive arm, is reviewing the toxicity of lithium salts—a key material in the production of batteries—and their potential to affect fertility in women. In September 2021, the European Chemical Agency’s risk assessment committee said three lithium salts—lithium carbonate, lithium chloride and lithium hydroxide—should be labeled as reproductive toxins after a study found that they could be potentially toxic to pregnant women and the development of fetuses.

“It’s another example where Europe is putting barriers up to the development of better supply chains that will enable the green transition," said Richard Taylor, founding director of Trafigura Group Pte.-backed refiner Green Lithium Refining Ltd.

A final ruling on whether lithium should be labeled harmful is expected in November, according to Francesco Gattiglio, director of external affairs for the EU at specialty chemical company Albemarle Corp.

Such a label would place restrictions on how lithium can be handled, which could affect its production and stifle new projects and recycling efforts, industry groups say. Regulation of lithium after new rules were placed on cobalt last year could stymie broader efforts across Europe to shift to renewable energy and batteries, companies and environmental groups say.

Cobalt was classified last year as a risk because carcinogenic qualities were found in its powdered form when inhaled by animals during testing. Cobalt producers say they have been trying to get approvals for further testing.

So far, the increased regulations have cut investment in cobalt refining within Europe and companies are set to invest in other markets with less regulation, said Adam McCarthy, president of the Cobalt Institute, a trade association that represents miners, traders and users of cobalt worldwide.

A number of European lithium mining and refining projects are under way in Finland, Germany and Portugal, but these could be jeopardized if lithium is tagged as toxic, according to producers and trade groups.

The U.S., Australia and Argentina have urged the EU to keep lithium off its list of toxic chemicals so that new supply chains for battery technologies outside of Asia are created.

In particular, the U.S. Commercial Service—part of the U.S. Department of Commerce’s International Trade Administration—has asked the European Commission to consider industry perspectives in its reviews of the safety of handling lithium for workers within the bloc, saying that the battery metal would be crucial in “our shared climate and energy transition objectives." The countries would compete with the EU for private investments in mining, refining or downstream operations of battery metals.

Up to 70% of the world’s batteries are produced in China and nearly half of chemical-grade lithium is refined in the country, according to price reporting agency Benchmark Mineral Intelligence. Classifying lithium as toxic could boost China’s dominance over battery metals and electric-vehicle supply chains, Mr. Taylor of Green Lithium said. “All it does is make other geographies better placed and more attractive for companies looking to establish battery supply chains."

Miners and users of lithium have said they just want consistent regulation and for the EU and other governments to clearly state their position when it comes to these metals.

European Commission President Ursula von der Leyen last month included lithium in the list of critical raw materials that Europe needs for its energy transition while advocating for less reliance on China for these metals. The bloc also needs to strengthen its supply of such raw materials in the face of the Inflation Reduction Act in the U.S., which is expected to promote investments in renewable energy and battery production.

The European Commission has played down the effects of a negative ruling, saying that it would result in a warning label on its health hazards—similar to that used on dishwasher tablets.

But some in the industry say the issue goes beyond labeling, as a toxicity designation could create a stigma around lithium and deliver a reputational hit to producers in the region. That could lead to reduced investment in the EU and make other regions like the U.S. more attractive.

The commission said it wants to protect human and environmental health, but is “aware of the crucial role of lithium for the green transition and future mobility. Therefore, any decision will be based on scientific evidence and broad consultations with all parties involved."

Lithium-based batteries are expected to dominate over the coming decade. Projections from pricing agency Fastmarkets show expected output of lithium carbonate to be just over 1.44 million metric tons while global demand is expected to reach 1.47 million tons by 2025, with electric vehicles accounting for much of the demand. The shortfall is expected to last through 2030, Fastmarkets said.

“We are out of lithium, out of nickel, out of copper and those materials are becoming essential," Massimo Gasparon, director of the European Raw Materials Alliance said during a panel at the Fastmarkets European Battery Raw Materials conference in Barcelona last month. “It is difficult to see how Europe can be independent here."

—Kim Mackrael contributed to this article.