Saudi Arabia plans a second lithium processing facility, as it ramps up efforts to work with Western partners to develop its battery supply chain.
The facility, which will use feedstocks mined in Austria to produce refined lithium hydroxide for BMW, is a sign of how supply chains for processing the metal are slowly evolving outside of China.
China accounts for nearly 60 percent of global processing of lithium, an important component of electric vehicle batteries — and the European Union and the United States are boosting incentives to create more capacity.
The Australian-listed European Lithium startup and the Saudi Obeikan Investment Group will each acquire a 50 percent stake in the plant. The facility will cost between $350 and $400 million and will likely produce the first lithium hydroxide in 2026.
European Lithium will supply the processing plant with lithium ore, known as spodumene, from its mine in southern Austria.
Much of the world fears what might happen if China shuts them down [lithium] said Tony Sage, CEO of European Lithium. “It would be a disaster for the energy transition.”
For Saudi Arabia, the project is the latest in a series of deals aimed at bolstering its role in electric vehicle production and the battery supply chain — part of a broader effort to diversify beyond oil revenues.
Earlier this year, Saudi Arabia signed an agreement with EV Metals, the Australian battery manufacturer, to develop a lithium hydroxide plant that will start production in 2026.
Lithium processing is energy-intensive, and Sage said Saudi Arabia was an attractive location for the processing facility because of its cheap energy.
Saudi Arabia aims to produce 500,000 cars annually by 2030, including those produced by US-based Lucid Motors, in which its sovereign fund, the Public Investment Fund, has acquired a majority stake.
Lucid, which has struggled over the past few years, said Wednesday it will raise $3 billion in an equity offering, with 60 percent of the money coming from the Public Investment Fund.
The wealth fund, which is headed by Crown Prince Mohammed bin Salman, has also started its own electric car manufacturer, Ceer, which plans to produce 170,000 cars annually, in cooperation with Foxconn and BMW.
The lithium hydroxide produced by the European lithium facility will be sold to BMW as part of the existing supply agreement. European lithium will provide 9,000 tons of lithium hydroxide annually to the automaker from 2027.
Even as the West seeks to secure lithium resources, prices for the metal have fallen about 50 percent since the start of this year — though they are still higher than the average of the past three years.
European Lithium said its total capital needs for building its Austrian mine and nearby ore concentrates, as well as developing the Saudi plant, will range between $800 million and $900 million. It plans a secondary listing on the Nasdaq stock exchange via a special purpose acquisition company, or a blank check merger, in the coming months.