Could you tell us a little bit about your new refinery in Germany and why that is exciting news?
Yes, at Rock Tech we made the decision a few years ago to focus on refining lithium, the chemical part, because this is crucial for recycling. We want to become a circular economy company. The permit grant we received in Germany is significant because, unlike most other countries, Germany grants permits for both construction and operation. We now have a full operational permit for 30 years. In the US, you first get a construction permit, start building, and then prove to the authorities that you are clean enough to operate. We have already proven this, making us one of the most advanced projects in the Western world, proving our technologies and knowledge.
For us to become a circular economy lithium company, this is a clear proof of concept. This is why it was so important. We are now focusing specifically on the refining part of lithium rather than mining.
Still, we are building a mining site in Canada. Until there are sufficient amounts of batteries to recycle, we need to put feedstock into the cycle, which can only be done with our own mines. We assume we will need this mine for the first 10 to 15 years. But we are building a long-term business. We start from day one with recycling corporations and creating recycling technologies. However, you first need the batteries to be produced and eventually to come back, which takes time. This is why our own mine is essential, but Rock Tech itself is not just a mining company.
You plan to increase your production capacity of lithium by five times by 2030. How are you going to achieve that?
The most important and difficult setup is usually your first plant. Once the first plant is financed, operational, and permitted, you can copy and paste the setup into other locations. This is what we are doing. With the permits granted in Germany, we can use our German converter setup and replicate it in Canada and elsewhere. About 80% of the planning can be copied, with only 20% needing adjustments for local needs, like emission standards, power supply and land plot structure. The key is the partners you align with. Building such a plant is a huge project, with a CapEx of around 730 million euros.
Where do you plan to build your next plants, and do you have partners in the automotive industry?
Our second plant will likely be in northern Ontario, Canada. We have started permitting and attracted the first equity investors. Infrastructure companies are developing it with us. In Germany, we have a partnership with Mercedes-Benz, our largest customer, with binding off-take agreements for 40% of our lithium hydroxide product. This contract has an initial value of at least 1.5 billion US dollars.
Most lithium is refined in China, and for a reason. How do you intend to compete with China given the country’s advantages?
The Chinese have applied conversion technology on an industrial scale for the past 25 years. They are forerunners in this technology. Since 2016, we have analyzed the markets, visited China, and exchanged information with Chinese companies. The Chinese need European partners for their industry, and we need Chinese partners for their expertise. We have technology partnerships with Chinese companies. We were the first to start planning and permitting a converter in Europe with a focus on the European industry, giving us a time advantage. We chose Germany for its excellent chemistry experts and plant-building capabilities and we have permitted proven and tested technology.
Lithium hydroxide is difficult to transport over long periods due to degradation, so producing it close to the cathode and battery cell production is crucial. As the battery cell industry ramps up in Europe, we will be a key provider of lithium, ensuring better quality and availability of the product. This makes regional production more advantageous than shipping from China.
We forecast that European companies will set up the lithium infrastructure, with Chinese, South Korean, and European companies producing the cathodes. Chinese OEMs will play a key role in the future European electric car markets. We expect to sell the majority of our lithium hydroxide to European carmakers and, eventually, also to Chinese car players in Europe.
Are you the only one outside of China capable of producing lithium hydroxide at scale?
Currently, China has around 29 converters, whereas the Western world has no full lithium hydroxide plant running yet. Australian miners produce spodumene concentrate, which is shipped to China for processing into lithium sulfate and then into lithium carbonate and lithium hydroxide. We have designed a similar plant for Europe, capable of processing spodumene concentrate from Africa or future European mines. In Europe and North America, no plant currently produces lithium hydroxide from spodumene; they only process lithium carbonate. Developing this capability is crucial for the Western world's independence.
Do you target other possible clients, beyond the automotive industry?
Yes, we target several potential industries. Besides carmakers, the most important industry for us is energy storage, specifically utilities. European utilities are natural customers due to their focus on renewable energies, which require efficient storage systems to manage overproduction on sunny and windy days. For example, Tesla has delivered many stationary storage battery plants to Australia to address similar challenges. As Europe produces more and more renewable power , storage systems become crucial.
If there was one challenge that you could resolve today, what would you pick?
The biggest challenge is the public perception and doubt regarding the necessity of batteries and the success of electric cars in the Western world. This doubt limits financing opportunities. Banks would be more aggressive in lending to the industry if they were confident that electric cars would dominate the market in a few years. As long as the Western car industry casts doubts, securing financing for lithium, cathode, and battery cell production remains challenging. Resolving this perception issue would significantly improve financing prospects.
If we speak again three years from now, what do you hope to be able to tell us about your progress?
In three years, I expect we will have two converters running, one in Germany and one in Canada. Our mine will be producing the necessary feedstock for our Canadian plant, and we will be planning our third plant. Achieving this will position us as a significant player in the lithium market. Outside of China, few companies will be able to produce lithium hydroxide at scale.
