Following the news that Northvolt and Galp’s planned lithium processing plant in Portugal will produce enough battery-grade lithium hydroxide for 700,000 electric vehicles;

Daniel Clarke, Thematic analyst at GlobalData, a leading data and analytics company, offers his view:

“Battery companies are now investing upstream to refine lithium directly, and carmakers will realize that they have to follow suit and play a bigger role in the sourcing and refining of battery metals. There are three core reasons for this. Firstly, there is a realization across the industry that battery metal bottlenecks lie ahead.

“Secondly, China currently dominates both the refining of battery metals and battery cell production. Companies in the EU and US want to sever this dependency, given that their countries have an increasingly complicated relationship with China, and batteries will be so critical to future industry. The US and EU have already signaled the need to develop a domestic critical raw material supply chain through various initiatives – Northvolt and Galp’s plant represents words finally turning into action.

“Finally, environmental, social and governance (ESG) concerns are very important in the battery industry. Producing battery metals on the same continent can significantly reduce carbon footprint, which is essential — considering that they are used within electric vehicles and renewable energy power sources. Additionally, bringing the supply chain closer to home allows for the EU to have greater ESG oversight over the project.”