Since lithium is particularly susceptible to supply chain disruptions, the UK has begun working to secure its own supply chain for lithium batteries in Europe. The country is making plans to have its own supply of lithium, so it can produce batteries that will be vital for the energy transition. This process begins with acquiring the all-important raw material. Already, the country has seen the Cornish Lithium mines in Cornwall, the Britishvolt gigafactory in Northumberland, and Tata Motors’ battery plant in Somerset.
The geographical distribution of lithium and resource monopolisation
There is a very real risk of a significant bottleneck in the worldwide lithium supply chain. As lithium becomes a crucial mineral in the electric vehicle (EV) revolution, the surging demand for these EVs may well surpass the supply. Furthermore, the uneven geographical distribution of lithium resources leads to volatile market dynamics. The primary reservoirs of lithium are concentrated predominantly in Chile, Australia, and China. Notably, China dominates the refinement and processing industries, accounting for a nearly 60% market share, according to GlobalData’s estimates. Indeed, the race to control this commodity has led to intense rivalries between China, the US, and the EU, with China currently dominating the mineral supply chain and the development of energy transition technologies.
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UK steps up to secure lithium
For these reasons, the UK is proactively taking measures to navigate through this volatile market landscape. A notable move in this direction is Cornish Lithium, a mineral exploration and development company that successfully secured a substantial investment of $67 million from the UK Infrastructure Bank. This aligns with the country’s aspirations to establish a domestic lithium mining industry to facilitate its transition to electric vehicles.
The establishment of Cornish Lithium follows previous government efforts to place the country at the forefront of the energy transition after the Britishvolt project failed to become a reality at the beginning of this year. Britishvolt is an intended gigafactory in Northumberland, which was envisioned to become a hub for manufacturing the batteries required for electric vehicles, with the potential to generate thousands of employment opportunities. However, the company faced significant financial challenges and collapsed in Q1 2023 after it was unable to secure the necessary funds to sustain its operations, and went into administration after it ran out of money. The collapse was due to several factors, such as poor governance, a lack of a track record in technology development, and bad timing amid the pandemic and high inflation.
The establishment of the Cornish lithium source could also support Tata Motors, an Indian car manufacturer, that in Q3 2023 confirmed plans to create a battery plant in Somerset. The Tata Group has committed to investing more than £4bn ($5.1bn) and the Prime Minister Rishi Sunak declared that this new plant could generate numerous job opportunities across the UK, thereby fostering economic growth and technological advancement.
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Right now, the UK seems to be working hard to establish its own domestic lithium supply. Even though it is unlikely that it will become a big player in the game, especially compared to countries such as Chile, Australia, or China, the urgent need for lithium means that we will probably see many countries with relatively modest lithium reserves entering the market soon. Furthermore, as we head towards electrification, smaller companies will try to join the race and compete with the big players.
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By GlobalData
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