The European Union and Chile have agreed on a partnership to liberalise bilateral trade and enhance EU access to metals like lithium and copper, which are widely used in electric vehicles.
The EU, which signed the trade deal on 9 December, already relies heavily on Chile for lithium sourcing, with over 60% of its imports of the “battery metal” coming from the South American country.
“The signing of a new trade agreement tests, on the one hand, European Union’s great interest in the export of non-ferrous metals to Chile, and, on the other hand, the strong dependence on imports, especially of copper and lithium, from this Latin American country,” says Russian metals market expert Leonid Khazanov.
As the EU mines very little copper and no lithium at all, the bloc imports large volumes of copper cathodes fromChilean state corporation Codelco, despite the presence of strong competitors like Germany’s Aurubis and Sweden’s Boliden.
At the same time, explains Khazanov, European carmakers are interested in a stable supply of lithium raw materials from Chile to support their ambitious plans for electric vehicle production. They are also trying to cover their backs: BMW earlier signed an agreement on the purchase of lithium hydroxide with European Lithium, which is developing the Wolfsberg field in Austria, while its competitor Volkswagen has closed a deal to receive lithium hydroxide from Vulcan Energy Resources, which will be extracted from hydrothermal brines in Germany.
Nevertheless, adds Khazanov, alternatives to Chile as a raw lithium supplier to the European Union “are unlikely to be found” in the next few years.