Coal-rich Czech Republic is hoping to diversify its mining sector by taping into one of the hottest commodities of the decade: lithium.
Demand for the metal, frequently referred to as “white petroleum,” is expected to triple by 2025, as it has become an irreplaceable component of rechargeable batteries used in high tech devices and electric cars.
And while global production of the metal grew by 14% last year, that wasn’t enough to meet demand, which caused prices to jump by 74% in December alone, according to London-based Benchmark Minerals Intelligence.
Banking on that growing need for lithium, a small ancient mining village, once famous for its tin and tungsten production, is hoping to attract investors to develop a recently found lithium deposit, considered the largest in Europe, Deutsche Welle reported.
Based on data from the Czech Geological Survey, the European country holds between 1.2 to 1.4 million tonnes of lithium, located mostly around the tiny village of Cinovec, on the border with Germany.
One company has already set its eyes on the prize. Australia’s European Metals Holdings, or EMH, plans to open a mine in the area, which is expected to produce over 20,000 tonnes of lithium carbonate (the processed ore) a year.
Such amount would place the Czech Republic among the top five lithium producers in the world, the Associated Press reported. Currently, the top producers of the white metal are Australia, Chile, China and Argentina, in that order.
EMH has had an exclusive exploration license and the right to apply for a mining permit since 2014 when it acquired Czech exploration company Geomet, the first one to confirm the presence of lithium in the region.
Unlike most other lithium deposits in the world, the one in the Czech Republic is in an area with built-in, working infrastructure, which includes a railroad. It is also conveniently located close to car makers, most of which have launched or are planning to introduce electric vehicles.
The landlocked country could use a windfall brought by a potential lithium industry, as it continues to recover from a recession that hit the country between 2011 and 2013, the nation’s longest-ever.
Prices of lithium carbonate have roughly doubled since 2015, according to analysts at investment bank Liberum. Some fear, however, that a speculative bubble may take shape in the market, with more small-cap miners turning their attention to deposits.