- Unit of miner European Lithium Ltd. (ASX: EUR) merging with Sizzle Acquisition Corp. (Nasdaq: SZZL) to create Critical Metals Corp.
- Developing Wolfsberg Lithium Project in Austria, 270km from Vienna, close to large import markets in Europe
- Wolfsberg to supply approximately 10,500 tons of lithium hydroxide
- In pole position as local supplier to European battery supply chain
- Has binding long-term offtake agreement with BMW
- Global demand for lithium is expected to triple by 2031 as EVs become more popular
- Enterprise value attractive compared with competitor Core Lithium
- Executive Chairman Tony Sage has 35 years of experience developing businesses in mining, energy and resources
- CEO Dietrich Wanke has 30 years of experience in mining industry
Europe’s energy transition to electric vehicles (EVs) has hit a snag as lithium prices have soared near records and many governments are concerned that China dominates the market. Shortages of the material have become a major concern for auto makers that need huge amounts to meet their long-term production targets.
And demand for lithium, a material that’s key to the renewable-energy transition, is forecast to triple by 2031 as EVs become more popular.
Meet Critical Metals Corp., which is focused on developing a low cost, highly sustainable, source of lithium hydroxide to give European battery and EV manufacturers better continuity of supply while also helping them meet their environmental commitments.
The company will be created by a merger between a unit of parent company European Lithium Ltd. (ASX: EUR) and special-purpose acquisition company called Sizzle Acquisition Corp. (Nasdaq: SZZL). The combined company will be listed on the Nasdaq.
Critical Metals is developing its wholly owned Wolfsberg Lithium Project in Carinthia, Austria, approximately 270 kilometers south of Vienna, as it aims to become Europe’s next producer of lithium for the green energy transition. The company aims to commence lithium hydroxide production at Wolfsberg in 2026.
The firm expects Wolfsberg to supply approximately 10,500 metric tons of lithium annually. The project is poised to become the first major source of battery-grade lithium in Europe, the world’s leading EV market, capable of supporting the production of approximately 200,000 EVs per year.
Several giga factories are being built by battery suppliers and some of Europe’s leading automakers in close proximity to the Wolfsberg Project to satisfy the growing demand for lithium-ion batteries in the EV market.
The Wolfsberg Project’s mine allows access to the nearby A2 motorway and the natural gas transmission pipeline that follows the motorway. In addition, the Wolfsberg Project is positioned in close proximity to large lithium import markets in Europe, such as Germany, Belgium, France, Italy and Spain, and planned battery projects in Hungary, Germany, Sweden and the UK.
Wolfsberg has a growing light industrial sector and a population of approximately 25,000 people and has good transport infrastructure, availability of natural gas and power and a qualified and productive workforce.
Critical Metals already has an agreement with BMW AG to supply battery-grade lithium hydroxide. As part of the agreement, BMW has agreed to make an advance payment of $15 million to be repaid through equal set offs against battery-grade lithium hydroxide delivered.
Critical Metals hopes to add consumers including EV and battery manufacturers in the region. The company is also looking further afield, and announced a MoU with Obeikan Investment Group to build and operate a hydroxide plant in Saudi Arabia. The 50:50 joint venture is expected to generate significant savings for Critical Metals Corp.’s Wolfsberg Project.
The company aims to become an “integrated” local supplier to the European battery supply chain – which should help potential customers achieve their ESG goals.
Lithium supplies are much bigger than a Europe issue too. U.S. policy makers, seeking to boost production outside of China, recently tied tax credits on electric cars to the amount of material they get from domestic sources or trade partners.
The U.S. has urged allies to diversify supply due to concerns over China’s domination of refining and production capacity for key materials including lithium, rare earths and cobalt. And the Biden administration has granted nearly $3 billion to about 20 battery-metals companies.
Worldwide electrification and the energy transition are clear focus area, as many governments, businesses and investors around the world making commitments to change – this presents an expansive commercial opportunity for renewable energy sources, particularly in the automotive sector.
Over the last six years, the market share of lithium-ion batteries has increased from 32% in 2015 to 70% in 2021, and this trend is expected to continue with the forecast increased market penetration of electric vehicles.
In addition to the growing demand of passenger EVs, the use of lithium-ion batteries for heavy-duty vehicles has been a driver in EV demand and e-bus and e-trucks continue to experience growth rates, with until sales expected to climb approximately 23% from 2021 to 2022.
EVs have also become increasingly popular among consumers, who increased their spending on EVs to $120 billion in 2020, a 50% increase from 2019, according to the International Energy Agency’s “Global EV Outlook.”
Critcal Metals also looks attractive compared to competitor Core Lithium, with an estimated 2024 enterprise value of 52x vs 61x at Core Lithium for 2024.
And Critical Metals’ C-suite is loaded with experience. Executive Chairman Tony Sage has 35 years of developing businesses in mining, energy and resources and CEO Dietrich Wanke has 30 years in the mining industry.
Add it all up and this is one (environmentally friendly) ride investors won’t want to miss.