As Europe accelerates its transition to electric vehicles and renewable energy storage, the need for lithium has surged dramatically. However, the region is grappling with significant hurdles in ramping up production capabilities. The Critical Raw Materials Act (CRMA) has positioned Spain as a pivotal player in this landscape, but issues such as permitting delays and local opposition threaten to undermine its potential. Spain boasts geological diversity and proximity to industrial hubs, making it an attractive site for lithium mining, yet the path to operational mines remains fraught with challenges.
The San José lithium project in Extremadura, spearheaded by Infinity Lithium, serves as a case study of these complexities. With over 111 million tonnes of measured resources containing 0.61% Li₂O, the project aims to produce 15,000 tonnes of battery-grade lithium hydroxide annually through an integrated underground mining approach. However, the total capital expenditure is projected to exceed €800 million, with production not expected until 2028-2029. Local opposition and judicial appeals have already delayed permitting processes significantly, illustrating that EU strategic initiatives do not necessarily override local governance.
In addition to lithium, Spain is also looking to revive its tungsten production, particularly in regions like Galicia and Castilla y León. Currently, Europe relies on imports for over 75% of its tungsten supply, predominantly from China. By establishing a domestic output of 3,500–4,000 tonnes of WO₃ equivalent annually, Spain aims to reduce its dependency on external sources. However, typical underground tungsten projects require capital investments ranging from €120 million to €180 million while maintaining competitive operating costs.
Conversely, Finland offers a contrasting model with its focus on integrated upstream and downstream operations. The Keliber project, majority-owned by Sibanye-Stillwater, is set to be Finland’s first commercial lithium operation. This initiative will combine spodumene mining with concentrators and a lithium hydroxide refinery in Kokkola. With a total CAPEX estimated between €600 million and €700 million and an expected output of 15,000 tonnes per year by 2026-2027, Keliber stands out as one of the few European initiatives likely to meet supply demands before 2030.
Finland benefits from several advantages: stable institutions, experienced permitting authorities, high public acceptance of mining activities, and access to low-carbon electricity priced at €50–70 per MWh. Additionally, Finland hosts Europe’s only cobalt refinery and is expanding its nickel sulfate production capacity, which creates a growing demand for lithium feedstock.
Europe’s Lithium Supply Gap
Despite these promising projects in Spain and Finland, Europe faces a looming structural supply gap in lithium production. By 2030, demand for lithium within the EU is projected to reach between 700,000 and 900,000 tonnes LCE annually due to the increasing adoption of electric vehicles and grid storage solutions. Even if all proposed projects come online as planned, domestic supply is expected to meet only around 120,000–150,000 tonnes—less than 20% of projected demand—indicating that imports will remain crucial.
The primary bottleneck hindering progress is processing capacity. Establishing a modern lithium hydroxide refinery capable of producing 50,000 tonnes per year requires substantial investment ranging from €800 million to €1 billion and consumes between 250-300 GWh of electricity annually. High energy costs—estimated at €70–90 per MWh—put European refiners at a competitive disadvantage compared to their counterparts in China or the US. Consequently, reliance on public-sector risk participation becomes essential; typically covering 20-40% of CAPEX through institutions like the European Investment Bank.
Lessons from Spain and Finland
The experiences of Spain and Finland highlight Europe’s execution challenges in scaling up lithium production:
- Spain: While rich in resources and industrial demand exists for lithium products, social opposition and permitting delays significantly hinder project timelines.
- Finland: The country benefits from effective institutions and streamlined permitting processes; however, the scale of operations remains insufficient relative to overall EU demand.
The situation underscores a critical reality: geology alone cannot bridge the lithium supply gap. Success hinges on coordinated efforts across mining operations, processing capabilities, energy supply chains, and market demand. Without significant advancements in refining capacity alongside mining initiatives, Europe risks having an abundance of raw materials that do not translate into meaningful contributions toward meeting its strategic objectives for sustainable energy transition.
