Tees Valley Lithium (TVL), a subsidiary of Alkemy Capital Investments, has entered into a non-binding agreement with Canadian lithium developer E3 Lithium. This long-term partnership aims to refine lithium carbonate from E3 Lithium's Clearwater Project in Alberta, Canada, into battery-grade lithium hydroxide at TVL's facility in Teesside, UK. The deal outlines the conversion of up to 50,000 metric tonnes of lithium carbonate over an initial ten-year period.
This collaboration is a strategic move to establish a resilient and diversified supply chain for critical battery materials. Currently, over 90% of global lithium refining capacity is concentrated in East Asia, with China alone responsible for more than 60%, creating significant geopolitical and supply chain risks for Europe. The partnership directly supports the UK Critical Minerals Strategy and the broader G7 Critical Minerals Action Plan, which was launched in Alberta in June 2025, emphasizing cooperation among allied nations. By anchoring lithium conversion capacity in the UK, the agreement aims to reduce reliance on single-country processing and enhance economic security.
The Tees Valley Lithium refinery, currently under construction in Billingham, Teesside, represents a significant investment of approximately £185 million ($248 million). It is projected to begin production in 2027 with an initial capacity of 25,000 tonnes per year, expandable to 100,000 tonnes per year. This output is expected to support the annual production of around 550,000 electric vehicles. The project is anticipated to generate £2.1 billion in Gross Value Added to the UK economy over 25 years and support around 1,700 jobs, including highly paid operational roles.
This independent merchant refining model allows TVL to process feedstock from various international producers, offering a competitive advantage by reducing Europe's dependency on Chinese-refined lithium. For E3 Lithium, the partnership provides crucial access to the growing European market for battery-grade lithium hydroxide. The refinery also boasts significant environmental benefits, utilizing 100% renewable electricity from its inception, which reduces the carbon footprint of lithium production. This aligns with the EU Battery Regulation, which mandates increased transparency and sustainability in battery supply chains.
This agreement underscores a deepening cooperation between the UK and Canada on critical minerals, building on a cooperation agreement signed in 2023. It aims to create a more resilient transatlantic supply chain for battery materials, mitigating geopolitical exposure and strengthening economic ties between allied nations. UK Minister of State at the Department for Business and Trade, Sir Chris Bryant, highlighted the agreement as a vital step in boosting domestic production and securing supply chains for critical minerals essential for modern technology and electric vehicles.
Impact on Product and Chemical Commodity Prices
The partnership will significantly expand the availability of battery-grade lithium hydroxide in Europe by creating an alternative refining hub outside East Asia. This will improve supply chain resilience, reduce geopolitical risks, support electric vehicle battery manufacturers with locally refined material, and enhance sustainability through renewable-powered processing. As production ramps up from 2027, the project is expected to improve long-term supply security for lithium chemicals. For chemical commodities tracked by ChemAnalyst, lithium carbonate and lithium hydroxide prices are unlikely to witness an immediate impact due to the project's future commissioning timeline. However, increased refining capacity and diversified supply sources could gradually ease regional supply constraints and moderate long-term price volatility in European lithium markets.
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