Two of Europe’s leading energy transition investors, InnoEnergy and Demeter Investment Managers, are planning to raise 500 million euros ($544.55 million) for a battery raw materials fund. The EU-backed fund, known as the EBA Strategic Battery Materials Fund, aims to address the significant gaps in Europe’s supply chain for critical minerals such as lithium, nickel, cobalt, manganese, and graphite.
The fund comes as the European Union seeks to reduce its reliance on foreign supplies of battery materials, in line with the EU’s Critical Raw Materials Act. The bloc is experiencing surging demand for electric batteries in the transportation and industrial sectors, leading to a need for a more self-sufficient supply chain.
InnoEnergy, as the manager of the EU-backed European Battery Alliance, aims to establish a complete domestic battery value chain to enhance the EU’s sovereignty. According to Diego Pavia, the CEO of InnoEnergy, the weakest link in any value chain is currently the upstream sector, including mining and recycling, where 90% of the current supply comes from China.
Commission Executive Vice-President Maroš Šefčovič emphasized the strategic importance of the battery industry and the need to secure raw materials to maintain global competitiveness. The long-term goal is to secure 40-50% of the necessary supply through projects that may cost around 7 or 8 billion euros. The success of these projects relies on the willingness of the fund to take development risks.
InnoEnergy, backed by 35 corporate and financial investors, aims to leverage its expertise and network to identify and support potential projects. Demeter, with 17 years of experience managing investments, will act as the investment manager for the fund. At least 70% of the fund’s investments will be dedicated to projects that boost domestic production, from mining to processing, refining, and recycling. The remaining investments will be directed toward countries like Canada, Namibia, and Argentina.
An important focus of the fund will be to explore more environmentally friendly methods of extracting and treating raw materials to align with the EU’s Sustainable Finance Disclosure Regulation. Antoine Troesch, the managing partner at Demeter, highlighted the development of less intrusive techniques as a key differentiator for the fund.
InnoEnergy and Demeter’s battery raw materials fund is a significant step towards securing Europe’s supply chain for critical minerals. By investing in strategic projects and exploring more sustainable practices, the fund aims to enhance the region’s self-sufficiency and reduce its dependence on foreign suppliers, particularly China. The success of these endeavors will play a crucial role in the EU’s quest for a complete domestic battery value chain, strengthening its position in the rapidly growing electric battery industry.
