Month: December 2021

Galp and Northvolt establish joint venture ‘Aurora’ to develop a lithium conversion facility

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  • Galp and Northvolt set up joint venture ‘Aurora’ to develop opportunities related to the fast-growing battery value chain
  • With a 50/50 stake, the joint venture is engaged in the development of Europe’s largest and most sustainable lithium conversion plant, to be located in Portugal, with an annual production capacity of up to 35,000 tons of lithium hydroxide and a start of commercial operations in 2026.
  • The project is aligned with the Portuguese and European industrialization efforts related to the energy transition, and is a milestone in the development of a European battery value chain
  • The joint venture will also continue to explore other business opportunities along the value chain, and is committed to adopt the most environmentally sound approaches throughout all activities

in Galp / Northvolt, 14-12-2021

Galp and Northvolt have agreed to set up a joint company, Aurora, that aims to become a steppingstone for the development of an integrated lithium-battery value-chain aligned with Portuguese and European ambitions.

With the main goal of establishing Europe´s largest and most sustainable integrated lithium conversion plant, the JV will develop a plant set to have an initial annual production capacity of up to 35,000 tons of battery grade lithium hydroxide – a critical material required by the lithium-ion battery manufacturing industry, which is expected to grow more than tenfold by the end of the decade.

The plant will use a proven conversion process, leveraging recent process improvements and technologies to increase sustainability and efficiency. Additionally, the JV is seeking to enable use of green energy to power the conversion process, thereby minimizing and eventually avoiding reliance on natural gas as is the conventional approach.

The joint venture is currently conducting technical and economic studies and looking at several possible site locations. A final investment decision is yet to occur, but the JV is envisaging a start of operations by year’s end 2025 and start of commercial operations in 2026. Based on similar projects, the plant could represent an investment estimated at around €700 million and create as many as 1,500 direct and indirect jobs. The JV is also exploring the adequate energy transition funding options to reinforce the development of the project.

Galp and Northvolt’s proven track records, complementary experience and expertise are expected to be further enhanced with the establishment of key partnerships along the value chain, namely in securing the supply of high quality spodumene concentrate from key suppliers.

The plant will be able to deliver lithium hydroxide sufficient for 50 GWh of battery production per year (sufficient for approximately 700,000 electric vehicles). As part of the agreement, Northvolt will secure an offtake for up to 50% of the plant’s capacity for use in its battery manufacturing.

The JV partners are unwavering on driving the highest standards of sustainability, notably in the extraction and concentration of spodumene, the processing of lithium hydroxide, as well as in all related processes. The partners are confident that Iberia hosts resources which can be recovered with a low greenhouse gas emission footprint, using the highest standards for environment and human rights protection, in compliance with best industry practices and environmental policies, ensuring a long-term sustainable value for all stakeholders.

Galp’s participation within this JV is a result of the Company’s strategy to develop new businesses aligned with the energy transition, taking advantage of its industrial competences and regional presence as an integrated energy player, and one of the largest solar power generation players in Iberia. The projects should fit within Galp’s decarbonisation path as well on its capital allocation guidelines, as per announcements at the Company’s latest Capital Markets Day.

Paolo Cerruti, Co-Founder and COO of Northvolt, comments: “The development of a European battery manufacturing industry provides tremendous economic and societal opportunity for the region. Extending the new European value chain upstream to include raw materials is of critical importance. This joint venture represents a major investment into this area, and will position Europe with not only a path to domestic supply of key materials required in the manufacturing of batteries, but the opportunity to set a new standard for sustainability in raw materials sourcing. This initiative comes to complement a global sourcing strategy based on high sustainability standards, diversified sources and reduced exposure to geopolitical risks”.

“This is a once-in-a-generation opportunity to reposition Europe as a leader in an industry that will be vital to bringing down global CO2 emissions, in line with European and Portuguese climate-change priorities,” said Galp CEO Andy Brown. “To be successful in this drive, we must all work together, industry and decision makers, with a sense of urgency, because if we do not claim this role today, others will.”

 

CLEPA | An Electric Vehicle-only approach would lead to the loss of half a million jobs in the EU, study finds

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  • Transition assessment confirms the essential role for electrification in reaching objectives of the Paris Agreement, but substantiates powertrain employment risks
  • 226,000 new jobs foreseen in EV powertrain production (assuming an EU battery chain), means a net loss of 275,000 jobs (-43% jobs) projected from now until 2040
  • 501,000 auto supplier jobs in Internal Combustion Engine (ICE) powertrain components production are expected to become obsolete if technology is phased-out by 2035
  • Of those half a million jobs, 70% (359,000) will most likely be lost in just a 5-year period from 2030-2035, highlighting the limited timeframe to manage considerable social and economic impacts
  • By complementing electrification, a mixed technology approach allowing use of renewable fuels could deliver a 50% CO2 reduction by 2030, while maintaining jobs and creating value-add

in CLEPA, 06-12-2021

CLEPA, the European Association of Automotive Suppliers, commissioned PwC Strategy& to assess the impact of three different Green Deal policy scenarios on employment and value-add1 among automotive suppliers across Europe2 in the period of 2020-2040. The scenarios represent a mixed technology approach, the current EV-only approach proposed in the Fit for 55 package, and a radical EV ramp-up scenario. All three scenarios assume accelerated electrification to meet climate goals, with a high market share for electric vehicles3 by 2030 of more than 50%, almost 80%, and close to 100%, respectively.

The automotive manufacturing sector is responsible for more than 5% of the overall manufacturing employment in 13 EU Member States4, with more than 60% of these workers employed by automotive suppliers. The study therefore provides a much needed European-wide assessment and further identifies the risks and opportunities in seven major production countries for automotive components (Germany, Spain, France, Italy, Czechia, Poland, and Romania). The study is also the first of its kind in evaluating the impact of different policy pathways to reach Green Deal objectives with a focus on automotive suppliers.

While automakers have greater capacity to divest or insource activities to compensate for a loss of activity in the powertrain domain, automotive suppliers can react with much less agility, as they are bound by long-term contracts with vehicle manufacturers. In addition to global and well capitalised industry leaders, the sector consists of hundreds of specialised companies and SMEs with less access to capital to invest in the transformation of their business models.

Transition vs disruption

The study forecasts that in the EV-only scenario, 70% of the employment impact will be felt already in the period of 2030-2035 and substantiates that electric vehicle opportunities hinge on the establishment of a deep EU battery supply chain, the timing and likelihood of which are still uncertain. Western European countries appear best placed to be strongholds in EV powertrain production, while employment in Central Eastern European countries will remain highly dependent on the internal combustion engine.

Henning Rennert, Partner at PwC Strategy& Germany, stated:

“While electrification puts powertrain employment at risk on the one hand, other workforce skills around areas such as software or infrastructure will be needed in the future. The future value-add and job creation in powertrain technologies depends on local battery production in Europe.”

 

CLEPA Secretary General, Sigrid de Vries, stated:

“The study highlights the risks of an EV-only approach for the livelihood of hundreds of thousands of people working hard to deliver the technological solutions for sustainable mobility. As automotive suppliers are responsible for most of the manufacturing employment in the automotive industry, it is critical that we put jobs with automotive suppliers front and center when managing the social and economic impact of the transformation. Innovations by automotive suppliers have made electric mobility increasingly accessible for consumers and an essential instrument to meet emission reduction targets. But society’s needs are far too diverse for a one-fits-all approach. A regulatory framework that is open to all available solutions, like the use of hybrid technologies, green hydrogen, and renewable sustainable fuels will enable innovation as we redefine mobility in the coming decades.”

An uncertain future for batteries

The study substantiates that up to 70 billion euros (70%) of the value creation related to electric powertrains will be connected to the processing of battery materials, the production of battery cells and cells modules, and the assembly of battery systems. It is important to highlight that these activities will not necessarily be with the same companies or in the same regions, as they require significantly different skills and expertise compared to conventional powertrain technology and are therefore unlikely to provide opportunities to most powertrain oriented automotive suppliers, in particular small and medium sized enterprises who employ around 20% of people working in the automotive supply industry. Earlier research by CLEPA illustrated that battery production provides relatively more jobs for academically schooled employees and less for the mechanical workers that are now producing parts related to the internal combustion engine.

Methodology

The study´s methodology is complementary to previous studies, (available through CLEPA’s employment portal) as it models figures from a company perspective. Data was gathered with the support of CLEPA5, national associations and companies in an explorative survey based on 199 questionnaires and validated with 33 expert interviews. To realistically model commercial decisions, production capacities at labour shift level (typically three eight-hour blocks) as well as country attractiveness, criteria have been assessed to develop wind-down scenarios for ICE vehicle technologies and ramp-up scenarios for EV technologies.

CLEPA’s policy recommendations6

The current Fit-for-55 proposal for CO2 emission standards for cars and vans look only at the emissions coming from the vehicle’s tailpipe, ignoring emissions related to the production of vehicles or the fuels they use, including how electricity is generated. To incentivise technologies with the lowest overall carbon footprint, emissions from vehicles should ideally be regulated on life-cycle basis, with a Well-to-Wheel (WtW) approach as a first step, which considers the production and distribution of the fuel/electricity used to power a vehicle. Emission reductions on the fuels/energy production side should be recognised when determining compliance with CO2 standards, for example through the introduction of a voluntary crediting mechanism, which enables an additional option for automakers to fulfill the fleet-wide targets with additional volumes of renewable fuels.

Technology openness gives industry the needed time to transition, while mitigating the social disruption often coupled with abrupt change, without compromising on climate. A planned and thoughtful transition consisting of a mixed technology approach keeps options open to adjust to new developments, be they technological breakthroughs, geopolitical events, or availability of resources, and at the same time, presents significant value creation opportunities in the automotive industry, one of Europe’s biggest industrial assets.

Sigrid de Vries goes on to say “A technology open approach should include rapid electrification with clean and renewable energy, complemented by clean combustion technology with sustainable renewable fuels. There are more options than tailpipe-zero emissions, and we need to recognise the role that climate-neutral fuels can play in reducing emissions, preserving consumer choice, affordability and towards maintaining Europe’s global competitiveness. Technology is not the enemy here but rather fossil fuels, and tech openness will be critical to deliver a just transition.”

 

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About CLEPA

CLEPA, the European Association of Automotive Suppliers based in Brussels, represents over 3.000 companies, from multi-nationals to SMEs, supplying state-of-the-art components and innovative technology for safe, smart and sustainable mobility, investing over €30 billion yearly in research and development. Automotive suppliers in Europe directly employ 1.7 million people in the EU.

Contact
CLEPA’s Head of Strategic Communications Filipa Rio: f.rio@clepa.be

About Strategy&

Strategy& is a global strategy consulting business uniquely positioned to help deliver your best future: one that is built on differentiation from the inside out and tailored exactly to you. As a part of PwC, every day we’re building the winning systems that are at the heart of growth. We combine our powerful foresight with this tangible know-how to help you create a better, more transformative strategy from day one. We’re 100+ years, 3,000 strategy consultants, over 295,000 PwC professionals, and 156 countries strong.

Contact
Annabelle Kliesing, Senior Communications Lead: annabelle.kliesing@strategyand.de.pwc.com

 

 

Footnotes

1 – Value-add is defined as revenue minus material costs and describes the part of the company’s individual value creation that directly contributes to the country’s economy

2 – EU+UK+EFTA

3 – Battery electric vehicles, plug-in hybrid electric vehicles and full hybrid electric vehicles

4 – Slovakia, Romania, Sweden, Czechia, Hungary, Germany, Spain, Poland, Slovenia, France, Belgium, Austria and Portugal.

5 –  CLEPA is the European Association of Automotive Suppliers

6 – Policy recommendations are not within the scope of the study and represent CLEPA views only