Interesting interview with Dirk Harbecke, CEO and Chairman of Rock Tech Lithium ( https://www.rocktechlithium.com/de/investoren ), a German lithium development company whose mission is to produce lithium hydroxide for electric vehicles, with plans to supply the automotive industry with high quality lithium hydroxide "Made in Germany":
Lithium is essential for the production of batteries in electric cars. Rock-Tech Managing Director Dirk Harbecke relies on this. In an interview, he explains how his company wants to satisfy the great hunger for the "white gold" and make Germany more independent of China.
ntv.de: So far, Germany has not played a major role in the mining or refining of lithium. Why are projects like this so rare in this country?
Dirk Harbecke: This is mainly due to the fact that lithium is very difficult to extract. Theoretically, lithium is everywhere in the ground. But we need it in a sufficient concentration in the rock to be able to extract it. Projects with one percent lithium content in the soil can be mined very well. Anything well below the one percent limit is technically possible, but extremely complicated and usually not economical.Such projects do not pay off. Bolivia, for example, theoretically has huge resources. Due to the low concentration, and also in connection with metals in the brine such as magnesium, the degradation is anything but easy. And so are some of the projects in Europe that are planning to mine lithium from water. In addition, Germany has long believed that the world market for raw materials will always be adequately served. We can now see in the electric car industry that this was a misconception.
Your company Rock Tech Lithium is building Europe's first lithium converter in ***en, Brandenburg. The metal is processed and refined there so that it can be used for battery production. When will battery-ready lithium hydroxide be produced?
The construction work should be completed by mid-2025. We are cautious with forecasts of how quickly we can start up the system. However, we expect to be able to produce the first battery-grade lithium hydroxide used in battery cells by the end of the first quarter of 2026.
Production in China is significantly cheaper. Why did your company still choose Germany as a location?
The actual price advantages are difficult to assess. China gets its raw material at the same prices as we do. The bottom line is that the Chinese benefit from cheap energy and cheap labor, that much is certain. Our advantage, however, is that we don't need that many workers. We are convinced that we can benefit from the wealth of experience in the chemical industry and that our know-how will lead to greater efficiency in production.
What makes you so sure?
The Chinese are currently facing the challenge of producing a battery-capable, high-quality lithium product in their production. That is very complicated. More efficient production makes us competitive with the prices the Chinese are offering in the market. If you look at the Chinese electric car market, you should know that a large part of the Chinese lithium is needed for its own market and is not available for export at all.
Much of the lithium-bearing rock for the converter in Brandenburg is said to come from a mine in the Canadian province of Ontario that Rock Tech acquired in 2010. Why should the lithium ore from Canada be processed in Germany and not directly on site?
We decided to set up the first converter in Germany because we can see that the European electric car market is two to three years ahead of North America. This means that demand in Europe will be even higher for some time. However, we are indeed planning our second converter for North America because our mine is closer and the energy costs are lower than in Europe at the moment.
Does the material from Canada cover the needs of the converter in Germany?
In order to keep dependency as low as possible, we are currently planning to obtain our lithium from a second source. Our negotiations on this with Canadian and Australian companies are well advanced.
The biggest driver of the lithium market is by far e-mobility. Lithium is essential for the production of lithium-ion batteries. How interested is the automotive industry in your company?
So the demand for our product is not a problem because the regionalization of the supply chain is the central issue at the moment in the new industries and the electric car industry. We have already won Mercedes-Benz as our core customer. The car manufacturer receives 40 percent of our annual production. Talks are currently underway not only to increase this amount even further, but also with other car manufacturers. Battery cell manufacturers have also contacted us. They are actually our direct customers in the value chain. But they act even more slowly in Europe than the car industry. Although the car manufacturers buy the lithium directly, they will deliver it to several battery cell producers.
Funding is not in place yet. Cost of the converter: 730 million euros. How difficult is it to convince investors and partners of your project?
Our shareholders were immediately enthusiastic and convinced of our business model. The massive growth rates speak for themselves. We are the first in Europe and want to achieve a market share of up to 30 percent with several converters in Europe. As a first mover, we want to grow together with our customers. At the moment we are in the process of securing the complete financing for the converter together with Deutsche Bank.
"Lithium batteries are the new oil," Tesla boss Elon Musk tweeted in the summer of 2022. Shortly before, he had described lithium mines as "money printing machines" and called lithium a "license to print money". Is he right?
Yes, we do indeed expect very high margins over the next ten years. After that, competition will increase and put pressure on margins. The term of our converter is set at 25 years - and we expect at least that long with very good margins. A complex profitability study recently showed that our converter in ***en paid for itself after just 3.6 years. That is an extremely short period of time.
The EU wants to bring 40 percent of the processing of critical raw materials to Europe. How many lithium converters are necessary to realize this?
In order to comply with the EU requirements, we would need between 10 and 15 converters in 2030, depending on the size. Several projects are currently being planned. That of the Dutch company AMG and ours are the most advanced. This would give us two converters in the EU that will go into production from 2024, 2025, 2026. As of now, we have to assume that Europe will not be able to comply with the EU requirements by 2030. More realistic is mid 30's. Once we reach the critical mass of lithium, Europe needs to massively recycle and build a circular economy. I know from many corporations that they are not far from recycling lithium cheaply and competitively. That will be possible very soon.
Supply and demand threaten to drift apart dramatically. According to forecasts, global demand will exceed supply by 500,000 tons in 2030. What has to happen now?
We have to significantly increase investments, especially in Europe, for battery raw materials. There is no way around it. What we are seeing in North America right now are two very important developments. On the one hand, the introduction of the IRA, a subsidy program for green industries, has ensured that Asian companies in particular are keen to enter North America and set up processing plants there. At the same time, the Australian mining companies are coming to Canada to build new mines there at high speed. On the other hand, we are currently observing massive investments in the automotive industry.The investments that Ford and General Motors are currently making in the field of electromobility go well beyond what the European car industry is currently making. The European automotive industry is already investing a great deal in battery cells by its standards, but it has not yet reached the beginning of the value chain. While General Motors and Ford are directly involved in lithium syndicates, that's not the case in Europe at the moment. But we can see that the auto industry is very interested. That's why I'm very confident that we'll quickly see car manufacturers investing in our industries in Europe.
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