European lithium processors are planning new capacity while competing with imported products that face no charge under the EU Carbon Border Adjustment Mechanism (CBAM). Lithium in its main raw and refined forms is currently outside CBAM’s scope. As a result, investors cannot rely on CBAM to protect processing projects from international competition. Projects instead depend on strategic policy support, competitive operating conditions and long-term customer agreements.
Building additional domestic processing capacity for Europe’s battery industry requires investment in industrial infrastructure, energy supplies, chemicals and environmental management. Imported lithium products can enter the EU without a corresponding CBAM charge. This difference affects the competitive conditions for conversion projects located in Europe.
EU lithium carbonate import volumes and supplier concentration
Eurostat data indicate that EU imports of lithium carbonate fell to approximately 8,200 tonnes in 2025, from around 15,000 tonnes in 2019. Prices have remained volatile since the market boom of 2022–2023. That volatility has made investment planning more difficult for companies exposed to changes in lithium demand and prices.
In 2025, Chile accounted for approximately 70% of the value of EU imports of lithium carbonate. Argentina and the United States were next in the ranking. The concentration points to Europe’s reliance on a limited group of external suppliers. It also comes before considering additional lithium requirements for battery-cell manufacturing.
Battery-grade chemical conversion within the EU supply chain
For European policymakers, access to lithium is only one element of supply security. Converting raw materials into battery-grade chemicals is also described as important for building a more resilient domestic battery industry. Battery-grade conversion is therefore positioned as a central step in the wider lithium supply chain.
Lithium from hard-rock deposits or brines must be processed into battery-grade lithium carbonate or lithium hydroxide. These conversion processes require strict impurity control and can consume significant amounts of energy and chemicals. The same steps are linked to operational requirements for conversion facilities.
Under the EU Critical Raw Materials Act (CRMA), Europe aims to expand domestic processing and strengthen its position beyond raw-material sourcing. Imported lithium chemicals are not currently subject to the same CBAM framework that applies to covered products such as steel and aluminium. European converters therefore need to compete through operational efficiency and commercial advantages rather than carbon-border protection.
The competitiveness of European processing projects is described as depending on reliable feedstock, renewable electricity, water management, product quality and proximity to customers. Dependable supplies are particularly important because conversion facilities need suitable raw materials in sufficient volumes to operate efficiently.
Offtake agreements and financing conditions for processing facilities
For investors and lenders, securing customers can be as important as securing lithium feedstock. Long-term offtake agreements with cathode producers and battery manufacturers can provide greater revenue visibility. They can also strengthen the financing case for processing facilities.
A project’s bankability is described as depending on its ability to deliver products that meet customer specifications and quality requirements at competitive cost while maintaining reliable supply. Logistics and proximity to downstream manufacturing can also affect commercial positioning. These factors are tied to how projects are evaluated for financing.
Renewable electricity and traceability may help European producers demonstrate environmental advantages. Lower-carbon production is described as creating lasting commercial value only when customers recognise it through procurement requirements, contractual commitments or other market mechanisms.
Prospects for extending CBAM to lithium products
Extending CBAM to lithium products is described as possible in principle, but designing an effective system would be technically challenging. Environmental footprints of lithium produced from brines and hard-rock deposits can differ based on extraction methods, processing technology, energy sources and other operating conditions.
Recycling is also expected to become a more important source of lithium feedstock over time. Any future carbon-accounting framework would need to cover different production routes. It would also need to avoid incentives that undermine Europe’s access to lower-carbon imported materials while balancing carbon-cost considerations with supply security and competitive European processing capacity.
Investment assessment without assuming CBAM protection
The immediate investment challenge is described as assessing European lithium processing projects as strategic industrial infrastructure rather than assuming CBAM will shield them from imports. Project prospects are described as depending on secure feedstock, efficient operations, reliable energy supplies and long-term agreements with battery-sector customers.
Public support under Europe’s critical raw materials strategy may help establish processing capacity, but commercial viability remains essential. To make Europe’s domestic converter plans durable, lower-carbon production, traceability and supply-chain reliability are described as needing to translate into tangible value for customers.