European Lithium signed an agreement with Obeikan Group to develop a lithium hydroxide refinery in Saudi Arabia, aiming to take advantage of low electricity and reagent prices. 

European Lithium signed a binding term sheet with Obeikan Group to develop a joint lithium hydroxide refinery in Saudi Arabia. The refinery will take spodumene concentrate feedstock from European Lithium’s Austrian-based Wolfsberg project, with the project forecast by Project Blue to come online in the latter half of the decade. Hoping to be verified by the Saudi Industrial Development Fund (SIDF), this new refinery will be owned on a joint 50:50 basis as a joint venture (JV) between the two companies.

The appeal of Saudi Arabia as a location for a lithium refinery likely comes down to several factors. Chiefly, operating costs can be reduced because of the country’s low energy cost and availability of sulphuric acid, which is used as a reagent in the spodumene refining process. Secondly, the country offers proximity to a number of growing markets in the lithium and electric vehicle space, including Europe.

In addition to this, the embedded carbon emissions intensity of lithium hydroxide produced at this refinery is likely to be lower than those produced at Chinese refineries. This is due to the country’s high reliance on natural gas for electricity generation and the likely use of natural gas in the calcining process. While not as low as that of refined lithium produced by lithium brine operations, this would put the emissions intensity value lower than Chinese mineral refineries, as Chinese operations have a higher reliance on coal-derived power for electricity and calcination. This may put the European Lithium-Obeikan Group refinery at an advantage when negotiating with European companies, which may be required to monitor embedded emissions in imported materials in the future as the Carbon Border Adjustment Mechanism (CBAM) is introduced.

However, a significant cost element for a lithium hydroxide refinery is the cost of feedstock. For spodumene concentrate feedstock sales, European Lithium and Obeikan Group have agreed to a price floor of US$3,000/t and a price ceiling of US$7,000/t. At a price floor of US$3,000/t, this would likely put the Obeikan refinery at a higher cost position in the market, with most integrated refineries expected to pay below US$3,000/t for spodumene concentrate feedstocks in the period to 2033.