The company signed the MoU with the European Institute of Innovation &Technology (EIT) initiative, Innoenergy, which supports innovation for sustainable energy.
The initial part of the package entails an investment in Infinity of a staged €800,000 ($866,660) at a 66% premium to its last traded stock price. The aim is to support the completion of Phase 1 of Infinity’s pilot project in Spain, the company said on Wednesday March 25.
For the second phase of the project, EIT will lead fundraising activities including supporting negotiations with European offtakers to secure offtake agreements for the project.
The second phase of the pilot San Jose lithium project is estimated to require between €1.6 million and €2.4 million, it said.
The Australian miner said the signing of the MoU meant Infinity lithium is the first lithium project developer to secure funding opportunities and support from the European Union.
Strategically located within the EU, Infinity’s San Jose Project will be a fully integrated operation producing battery-grade lithium hydroxide. The raw material will be sourced from hard rock locally.
Demand for lithium hydroxide is expected to increase in the coming years, coinciding with the development of high-performance batteries and electric vehicles with longer driving range.
Infinity seems undeterred by the pullback in lithium prices seen over the last two years as well as headwinds created by the global spread of the Covid-19 virus which prompted many other lithium companies to shelve their plans.
A number of producers across the lithium industry have recently announced delays to expansion projects due to poor returns in the weak lithium price environment and further headwinds - triggered since the beginning of the year - by the spread of the Covid-19 virus and the subsequent economic slowdown.
Fastmarkets assessed the lithium hydroxide monohydrate 56.5% LiOH.H2O min, battery grade, spot price, ddp Europe and US
at $10.5-11.50 per kg on March 19.
This compares with a spot price of $15-16.50 per kg on March 21 last year.
EU drive for strategic lithium reserves
EIT is an initiative established within the European Battery Alliance (EBA) framework, which was created in 2017 by the European Commission, the European Investment Bank and other industrial stakeholders to support the creation of a battery manufacturing chain in Europe.
EIT Innoenergy’s chief financial officer, Diego Pavia, said: “EIT Innoenergy strive to push Infinity Lithium’s project in Spain to completion and further in order to support the development of a sustainable and regional lithium-ion battery supply chain in Europe.
“Our support will bring the project towards the final phase of its development and allow European customers, including battery and automakers, to source lithium chemicals in the EU.”
William Adams, head of battery materials and base metals research at Fastmarkets. said: “The coronavirus has highlighted how stretched supply lines are a risk for manufacturers, as OEMs [original equipment manufacturers] have experienced recently after the flow of many parts from China were disrupted when the coronavirus struck China in mid-January.
“To support a local, European, lithium project makes sense and we expect there will be more of the same…despite the pain the industry is suffering, you do not have to look many years forward to see how much demand for battery raw materials there will be in Europe.”