Saudi Arabia is pushing its attempts to create its own battery supply chain by preparing to construct a second lithium processing facility there.
Lithium is a crucial component of electric vehicle batteries, and China already processes close to 60% of the world's lithium. Saudi Arabia is the latest country to show that efforts are being increased to create supply chains for "green" metals.
“A lot of the world is fearful about what would happen if China switched off its [lithium] exports,” said Tony Sage, executive chair of European Lithium. “It would be a disaster for the energy transition.”
Obeikan Investment Group, a Saudi industrial conglomerate, and European Lithium, a supplier of lithium to BMW, signed a legally binding letter of intent to form a joint venture company (JVco) that will operate a lithium hydroxide processing plant in Saudi Arabia at a 50/50 split.
According to EUR Executive President Tony Sage, Saudi Arabia is a desirable location for lithium processing facilities because the cost of local electricity is reasonable and lithium processing is a highly energy-intensive operation.
The cooperation is the most recent in a line of agreements for Saudi Arabia that aim to increase the nation's capacity for processing lithium as a part of the country's endeavour to diversify its economy away from oil income.
An deal to jointly construct a lithium hydroxide factory there was struck by Saudi Arabia and the Australian battery manufacturer EV Metals earlier this year.
In accordance with the contract, EUR will give the joint venture JVco spodumene mined in the Wolfsberg lithium mining project in southern Austria.