European Metals Holdings’ (ASX, LON: EMH) shareholders have approved a major investment in the company’s Cinovec lithium and tin project in Czech Republic, believed to be Europe’s largest deposit of the battery metal.
The decision allows Czech utility CEZ, in which the state holds a 70% share, to invest €29.1 million ($32m) for a 51% equity interest in Geomet. The company is EMH’s subsidiary and holder of the project licenses.
Cinovec is now fully funded up to the decision to construct, EMH said, paving the way for the project to become the first European Union producer of battery-grade lithium from a local mine.
The deal could also help CEZ transition towards renewable energy and position itself as a main supplier for Europe’s electric vehicle (EV) industry.
Construction of the project, acquired by EMH in 2012, is expected to take two years.
Cinovec is located in the Krusne Hore Mountains, which divide the Czech Republic from the Saxony State of Germany. The asset is within a historic mining region, with artisanal extraction dating back to the 1300s.
Unlike most other lithium deposits in the world, Cinovec is in an area with built-in, working infrastructure, which includes a railroad. It is also located close to car makers, most of which have launched or are planning to introduce electric vehicles.
The world’s top three lithium producers are Australia, Chile and China. The Czech Republic could potentially take the fifth place, after Argentina, thanks to Cinovec.
The transaction, expected to close on April 27, comes as EV demand continues to rise.
Benedikt Sobotka, chief executive of Eurasian Resources Group and co-chair of the Global Battery Alliance said this week that EV penetration rates are growing across many countries, with the UK reaching a 7% rate in March, Germany setting a new record of 9% and France attaining a plug-in EV penetration rate of 12%.
The same pattern is evident in many other countries, Sobotka said. In Portugal, Tesla’s Model 3 became the second bestselling car in March, just behind the Mercedes-Benz A-Class and Italy EV sales are also at record high levels.