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‘The demand is off the scale’ says man behind plans to bring lithium hydroxide production to Teesside

The businessman behind plans to bring the UK’s first lithium hydroxide plant to Teesside Freeport says plans continue apace as demand for the chemicals is “off the scale”.

Paul Atherley owns 50% of Alkemy Capital Investments plc and is non-executive chairman of the investment vehicle behind Tees Valley Lithium – the company that aims to bring a £216m factory to Teesside Freeport that will produce the vital chemicals used by electric vehicle battery makers.

He says the touted capacity of forthcoming electric vehicle battery gigafactories – including Britishvolt in Northumberland and Envision AESC in South Tyneside – is around 700GW, dwarfing the 75GW of installed electricity capacity currently in the UK. But there are currently no producers of the key component, lithium hydroxide, in Europe.

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And at the moment, China controls about 90% of the world’s lithium hydroxide supply and it will need much of this to satisfy its own plans for carbon neutrality by 2060.

Competitors have also signalled plans for similar plants in Germany and Portugal but Mr Atherley says Tees Valley Lithium is moving quickly, and benefits from Wilton International’s “plug and play” chemicals infrastructure and proximity to customers.

Earlier this year the firm paid £50,000 for exclusivity rights to a 20-acre plot at Wilton International, owned by Sembcorp, and now it is building a management team with hopes the plant will be operational in late 2023, before ramping up capacity to 2030 by which point it could be producing 15% of the lithium hydroxide needed by European electric vehicle makers.

In a recent presentation with Alkemy’s brokers VSA Capital, he said: “Companies that spend two years doing feasibility studies – all they’re doing really is improving the risk factor, the variability from something like 25% to 15% and that’s really to satisfy the bankers. If you’ve already decided your process routes and you’re already within a chemicals park, you don’t need to spend two years and $5m-$10m on a feasibility study because you’ve got known equipment suppliers into a known infrastructure.

“We’ll go from class four straight into feed – in fact, we’re already talking to EPCM (engineering, procurement and construction management) contractors, so we don’t have that big long delay that you would normally have.”

Mr Atherley is also chairman of Pensana Rare Earths plc, a metals supplier to the electric vehicle and wind turbine market. Pensana was part of the successful bid to bring a freeport to Humber – where it is creating a rare earth processing hub at Saltend Chemicals Park. Tees Valley Lithium’s aim – much like Pensana – is to provide an attractive alternative to global mining companies who may otherwise sell their products to China. Its facility is the start of the supply chain of vital elements used in offshore wind turbines and electric vehicles.

The raw material for lithium hydroxide is lithium spodumene, which only contains about 6% lithium. Currently, mining firms ship large quantities of spodumene to processing plants in China but Tees Valley Lithium’s model will take primary lithium sulphate of between 30-50% lithium which streamlines the process.

Electric vehicle batteries require extremely pure lithium hydroxide which means exacting standards of chemical processing are required. Mr Atherley described the process as “more lab coats and computers than hi-vis and hard hats”. At the moment Tees Valley Lithium has yet to sign any contracts for supply of the raw material but is looking to to sign up mining companies in the coming months.

Tees Valley Lithium could be supplied by miners as far afield as Australia, but there is also growing potential for sources closes to home including the discovery of “globally significant” lithium deposits in Cornwall.

Mr Atherley said: “Here we are trying to decarbonise the transport industry but we’re shipping 94% waste around the world on the shipping industry – which already accounts for about 3% of the world’s carbon emissions. It doesn’t make much sense.”

He added: “Cornwall, and other companies in the UK – we think the place their product will go to will be Tees Valley Lithium, rather than shipping it all the way to China.”

Tees Valley Lithium plans staged production across four ‘trains’ – the first involving a process known as Glauber’s Salt Route – commonly used in China and Australia. It involves the raw material – lithium sulphate monohydrate (LSM) – being dissolved in water before impurities are removed in two stages.

The purified solution is then pumped to a lithium hydroxide reactor where caustic is added to create a chemical reaction. Some of the production trains will also use processes driven by wind power from the North Sea.

Mr Atherley hailed plans to connect Teesside to the Dogger Bank windfarm, with high voltage cables being laid and onshore converter stations being built just adjacent to the Wilton International site that Tees Valley Lithium could occupy. The move will give firms like them direct access to cheap power which can be temporarily stored in batteries onsite.

“The exciting thing is that if we can get a low carbon footprint into the lithium hydroxide, this is exactly what the cathode active material makers want because ultimately, when you buy cars in Europe, they’re going to have an embedded carbon signature in them,” he said.

“That’s going to be the behavioural economics that are going to drive carbon out of the system. The European Union has already made that clear with the carbon border adjustment mechanism.

“So, if we can sell a product that is low carbon and it’s on the doorstep of the cathode active material makers we are looking at potential premiums.”

A planning application for the Wilton International site is due to be submitted this month, with approval expected by Tees Valley Lithium this summer. The firm will benefit from five years of business rates relief and discounts on land tax and stamp duty thanks to the site’s Enterprise Zone status.

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