Local time on Wednesday (October 19), the world's largest lithium producer Arbor (Albemarle) Chief Executive Officer Kent Masters said that if the EU will be lithium is a hazardous substance, will increase the company's costs, but Arbor does not intend to leave Europe.

With a key role in the manufacture of electric vehicle batteries, lithium is an important commodity for meeting global carbon reduction targets and is on the EU's list of key raw materials in 2020.

However, the European Commission is weighing a proposal from the European Chemicals Agency (ECHA), which proposes to classify lithium carbonate, lithium chloride, and lithium hydroxide as substances hazardous to human health.

Although the proposal does not directly prohibit the import of lithium, if implemented into law, it would make processing, packaging, and storage more stringent, thus increasing the cost of lithium processors.

The European Commission could make a decision as early as this week, Masters said reluctantly, adding that the proposal is likely to be approved despite Arbor's opposition and lobbying. masters added: "It's a reflection of increased bureaucracy, it changes the way you deal with the material."

That said, Masters also stressed that the rules are unlikely to slow the trend toward universal electric vehicles in Europe, given the ambitious goals the EU has set for electrification.

In June, Arbor warned that the regulations could force it to close a processing plant in Langelsheim, Germany. But Masters said Wednesday that while the new rules will raise costs, demand in Europe will continue to drive its business there, and it's too early to say how much costs will rise.

Europe's demand for lithium will be 18 times higher by 2030 than it was in 2020, and that figure will grow to 60 times by 2050, according to European Commission projections.

Europe produces very little lithium and is therefore very dependent on imports, and both the EU and automakers want to localize the supply chain. But the industry warns that if the EU classifies lithium as a hazardous substance, it will hinder the localization of the EU battery supply chain, with future battery recycling and cathode manufacturing moving out of the EU.