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Martin Steinbild, Director of Lithium Business Development at Savannah Resources (AIM:SAV), says that given Europe’s position as the world’s second largest market for electric vehicles (EVs), it is important that a lithium supply chain be established there. I can add, that there will be many advantages like reducing the dependency on China or other imports, increased flexibility when any disturbances occur and at the end, reduced costs, because no duties have to be paid and to keep inventories low (working capital).
Europe could account for between 15 and 20 percent of market share in EVs, meaning there is plenty of room for producers and manufacturers within the value chain to operate. The basic challenge is to feed that demand.
Talking prices, Savannah expects the price floor to remain for the next one to two years before it starts to recover. The reason is an oversupply situation for spodumene concentrate from Australian mines and delays in conversion capacity in China. The supply/demand relation in the lithium salt market is more balanced.
Savannah operates the Mina do Barroso lithium prospect in Portugal, which it describes as the largest spodumene resource in Europe.
I see very high risk, if a junior miner invests in a chemical plant and operates this plant. Lithium is not a commodity and quality and consistency requirements are not easy to meet and will increase in the future. It is a completely different business compared to mining. Savannah’s strategy is to encourage specialized companies with experience in the lithium field (or from similar processes) to invest in Europe. It is possible to form a close partnership to mutually benefit from the competencies of both partners.