Lithium mining at Cínovec offers a strategic opportunity for Czech industry. But mining alone will not be enough.
This article is a translation of a Czech article published by Update-EU.
Supplies of critical raw materials have become one of the key prerequisites for the development of electric mobility and modern industry. The Czech automotive sector is becoming increasingly dependent on them, while European institutions are searching for ways to reduce reliance on China. Joint procurement of critical raw materials and lithium mining at Cínovec are expected to play an important role. Experts, however, warn that without developing the entire battery value chain, Europe's strategic autonomy will remain incomplete.
Lithium, rare earth elements and cobalt have become some of today's most valuable raw materials. They are indispensable for manufacturing batteries, electric vehicles, wind turbines and a wide range of digital technologies. Their importance is growing rapidly: global demand for lithium is expected to increase twelvefold by 2030, while demand for rare earth elements could rise sixfold.
The EU, however, remains heavily dependent on imports from third countries, particularly China. It has therefore adopted the Critical Raw Materials Act (CRMA) and the RESourceEU initiative to promote the extraction and processing of strategic raw materials in Europe, encourage recycling and strengthen the resilience of European supply chains.
The Future of the Czech Automotive Industry
For Czechia, the issue is particularly important. In 2023, the automotive industry accounted for around 10 percent of GDP—the highest share in the European Union—and employed nearly half a million people, including suppliers.
The transition to electric mobility will only deepen this dependence. Manufacturing batteries and electric vehicles requires significantly larger quantities of critical raw materials than producing conventional cars.
According to a study by the EUROPEUM Institute, the Czech automotive sector finds itself caught between two dependencies: German demand and Chinese supply chains. Imports of batteries from China alone reached a record €2.5 billion in 2023.
"Diversifying supply sources and reducing dependence is possible, but it cannot be eliminated completely in the foreseeable future. China dominates above all in the processing of critical raw materials and the downstream stages of the value chain," says Filip Křenek, an analyst at EUROPEUM.
He argues that different raw materials should be viewed separately. Diversifying lithium supplies is more realistic thanks to projects in Australia, Chile and Canada, while building alternative supply chains for rare earth elements and permanent magnets will take considerably longer.
Can Joint Procurement Also Help Smaller Companies?
Reducing dependence on China is precisely the goal behind the RESourceEU initiative and the EU's joint procurement mechanism for strategic raw materials. The aim is to strengthen the bargaining position of European companies and secure more stable supplies.
The question remains whether smaller companies will also benefit from the new mechanism. According to Křenek, the European Critical Raw Materials Centre should help prevent smaller economies from remaining mere "price takers."
"It is essential that not only major car manufacturers, but also suppliers—the backbone of our industry—can participate in these mechanisms," says Tomáš Jungwirth, Communications Manager at AutoSAP.
The shift to electric mobility will inevitably affect employment, particularly among suppliers producing components for internal combustion engines. At the same time, however, new opportunities are emerging in batteries, electronics and software.
"The Czech automotive industry has repeatedly demonstrated its ability to adapt to technological change. I believe it can successfully manage this transition as well, provided the right conditions are in place," Jungwirth says.
Křenek notes that many of the jobs at risk are concentrated in regions where alternative employment opportunities may be limited.
Cínovec as a Strategic Opportunity for Czechia
According to Jungwirth, the Czech automotive industry is technologically well prepared for the transition to electric mobility. The major challenge is securing sufficient supplies of critical raw materials at competitive prices.
Czechia is not only a consumer of these materials. Under the European critical raw materials strategy, it is home to two strategic projects—Cínovec and Chvaletice—giving the country an opportunity to become part of Europe's emerging raw materials value chain not only on the demand side, but also as a supplier.
One of the country's flagship projects is the extraction and processing of lithium at Cínovec, led by Geomet, a subsidiary of the ČEZ Group.
With an estimated investment of CZK 42 billion, it could become the largest investment in the history of the Ústí Region and one of the biggest industrial projects ever undertaken in Czechia.
According to existing geological surveys, the site contains around three percent of the world's lithium reserves, a resource essential for manufacturing batteries for electric vehicles and energy storage systems.
"The project is strategic not only for Czechia but also for Europe as a whole. The automotive industry is undergoing an inevitable transition towards electric mobility, and a domestic source of lithium will help preserve jobs, the country's automotive tradition and its extensive supplier network," says Jaroslav Verner, spokesperson for the ČEZ Group.
The importance of Cínovec extends well beyond Czechia. The European Commission has designated it a strategic project under the CRMA, and it could contribute to Europe's ambition of sourcing a greater share of its critical raw materials domestically.
Experts caution, however, that mining alone will not automatically make Czechia a major player in the European battery industry.
Filip Křenek shares a similar view.
"This project gives Czechia a tangible negotiating advantage in European discussions on raw materials, creates opportunities for related industries such as processing and recycling, and could generate new jobs in a former coal-mining region," he says.
At the same time, he warns that the road to production will not be straightforward. The project is still awaiting completion of its environmental impact assessment, its timetable has already been postponed several times, and concerns raised by some local residents will also need to be addressed.
According to Křenek, planned annual production of 37,000 tonnes of lithium hydroxide would be enough to manufacture batteries for more than one million electric vehicles. Mining, however, is currently not expected to begin before around 2030. Until then, Czech car manufacturers will continue to source lithium and other critical raw materials primarily from abroad.
Mining Alone Is Not Enough
Experts agree that extracting lithium alone will not strengthen Europe's strategic autonomy. If Czechia remains merely a supplier of raw materials while higher-value stages of the battery value chain are located elsewhere, the strategic benefits will remain limited.
"We need to build the entire ecosystem—from mining and processing to recycling. That is exactly what both the CRMA and the new Czech Critical Raw Materials Act are intended to support," says Verner.
Recycling is another essential component. The EU is gradually introducing mandatory minimum shares of recycled materials in new batteries.
"The main challenge is not competition between recycling companies, but the overall readiness of the European market. Investments in recycling and new technologies are still lagging behind," says Kateřina Vránková of Ecobat.
Jan Vejbor of the Czech Battery Cluster adds that the development of recycling is also constrained by the absence of large-scale battery manufacturing in Czechia.
Ultimately, Czechia's success in the field of critical raw materials will depend not only on lithium extraction at Cínovec, but above all on whether it can build a complete battery value chain.
