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**Key Takeaways**
* **Strategic Supply Chain Re-shoring:** Atana Elements’ audacious plan to extract lithium directly under European battery factories underscores the continent’s urgent drive to localized critical mineral supply chains, mitigating geopolitical risks and reducing reliance on China. This move is a direct response to global fragmentation and the imperative to secure vital inputs for Europe’s burgeoning electric vehicle (EV) industry.
* **Technological Innovation & DLE Potential:** The venture highlights the growing role of Direct Lithium Extraction (DLE) technologies, like those pioneered by Lilac Solutions, in unlocking unconventional brine resources. Such methods promise a potentially more sustainable, environmentally friendly, and politically viable pathway to meet surging EV demand by accessing previously inaccessible deposits within established industrial hubs.
* **Auto Industry’s Evolving Upstream Engagement:** Following past hesitations, major carmakers are increasingly re-evaluating their direct involvement in raw material sourcing. This initiative reflects the growing imperative for automotive giants like Volkswagen and BMW to secure stable, proximate, and environmentally compliant lithium supplies to fuel their ambitious electrification strategies and avoid future production bottlenecks and price volatility.
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A US start-up is planning to drill for lithium directly under battery factories that supply Volkswagen and BMW, in an audacious pitch to reduce Europe’s reliance on China for critical minerals. This initiative comes at a pivotal moment, as global supply chains remain fragile and geopolitical tensions intensify the urgency for Western economies to secure their own raw material independence, particularly for the electric vehicle revolution.
Atana Elements, a critical minerals exploration company backed by Chilean mining giant Antofagasta, has acquired 1.5mn acres of licences to explore lithium deposits in Salzgitter, Germany and Wroclaw, Poland. These locations are far from coincidental; both sites include major battery factories, including one owned by Volkswagen’s battery subsidiary PowerCo and another by LG Energy, a key supplier to European automakers. The strategic placement of these proposed extraction sites speaks volumes about the drive to create fully integrated, localised supply chains, shortening logistics and buffering against international disruptions.
While lithium is an element that is plentiful in the earth’s crust, China holds a dominant and near-monopolistic position in the processing of lithium chemicals — a choke point that Europe and the US are desperately trying to circumvent. This dominance extends beyond just processing, encompassing significant investments in mining assets globally and controlling much of the battery manufacturing capacity.
“You can see Europe getting worried about where all these minerals are coming from,” said Atana’s chief executive Tom Wilson, citing energy shocks caused by the war in Ukraine, escalating trade tensions with China, and the perennial Strait of Hormuz crisis. These geopolitical flashpoints have starkly highlighted the vulnerabilities of relying on distant, often politically unstable, supply lines. “The supply is getting more and more fragmented with de-globalisation . . . and our focus is, can we find these minerals close to where the demand is,” he added, articulating a strategy increasingly adopted by industrial powers.
The European Union, including Germany, has been actively funding exploration projects to secure local supply chains of critical minerals, often leveraging new technologies to process the metal from unconventional brine resources. This policy push is exemplified by initiatives like Vulcan Energy, which last year secured a $2.6bn financing package to build Europe’s largest lithium production project in the Upper Rhine Valley, demonstrating a clear appetite for innovative, regional solutions. These government-backed efforts are crucial in de-risking nascent projects and signaling long-term commitment to mineral self-sufficiency.
Atana’s approach involves using historical geology data and advanced AI technology to identify areas that could hold significant reserves of critical minerals. The deposits were coincidentally discovered below these two major industrial plants that would require large amounts of lithium to produce batteries for some of the world’s largest carmakers. This serendipitous discovery, if proven viable, could dramatically reduce the logistical complexities and carbon footprint associated with traditional long-distance mineral supply chains.
Wilson underscored the market urgency: “You’ve got all these markets here that are worried about where their feedstock is going to come from and suddenly you’ve got these minerals that sit underneath them.” This proximity is not just a logistical advantage; it’s a strategic one, offering greater control over quality, security, and sustainability metrics.
Established in Texas last year, Atana recently raised $27.5mn in seed funding led by Lowercarbon Capital, a US fund co-founded by Chris Sacca, who is known for his early-stage investments in tech giants like Twitter and Uber. The involvement of such a prominent climate-focused VC signals the growing convergence of venture capital with critical mineral development, driven by the immense market potential of the green transition.
The company was spun out of Lilac Solutions, which has developed cutting-edge technology to extract lithium from salty liquid brine deposits — not rocks. This Direct Lithium Extraction (DLE) technology, backed by the venture capital arm of BMW, promises a potentially more environmentally friendly process compared to traditional hard-rock mining or evaporation ponds, which often require extensive land use and water resources. DLE’s appeal lies in its smaller physical footprint and potentially faster extraction rates, which are critical for meeting soaring demand.
“The car industry has historically been far more reluctant to go too far upstream,” Wilson said, referring to automakers’ traditional aversion to direct involvement in raw material extraction, preferring to focus on manufacturing and assembly. This reluctance stemmed from the volatility of commodity markets, the capital intensity of mining, and a lack of specialized expertise.
However, market dynamics are forcing a rethink. Carmakers rushed to back battery metal projects several years ago when lithium prices rose sharply, keen to secure their raw material supply chains. Yet, as prices cooled and project complexities emerged, many planned projects have been delayed and some partnerships cancelled. Now, with demand forecasts consistently showing that supply is expected to surpass available capacity, carmakers are again getting more deeply involved in efforts to strengthen European energy security and secure their future. Atana is also in discussions with venture capital arms of carmakers, although none of them invested in the recent funding round, indicating continued strategic interest without direct capital commitment yet.
VW declined to comment on Atana’s plans, while BMW stated its fund’s investment in Lilac “was not tied to any specific project or supply arrangement.” This cautious stance highlights the early stage and inherent risks of such ventures, even as the strategic imperative grows.
The urgency stems from unprecedented demand growth. According to International Energy Agency data, demand for lithium has risen an average of about 30 per cent annually this decade, a dramatic acceleration compared with approximately 10 per cent growth in the 2010s. This exponential growth is primarily fueled by the rapid expansion of the EV market and the increasing need for grid-scale energy storage solutions.
Forecasts from leading market intelligence firms like Wood Mackenzie, Project Blue, Fastmarkets, and Mysteel project annual global lithium demand to jump to between 3.6mn and 6.3mn tonnes over the next decade, a significant increase from 1.1mn tonnes last year. The gaping chasm between current supply and future projections is a major concern for industries reliant on this critical mineral. In March, Wood Mackenzie specifically warned that existing supply projects were unlikely to meet demand beyond the mid-2030s, signaling a looming structural deficit that could constrain EV production and hinder global decarbonization efforts.
Atana, which counts former Shell executive Brent Cheshire among its advisers, said it expects to be able to extract about 26mn tonnes of lithium in total from the two projects over roughly 20 years. These figures are estimates based on legacy data, including oil and gas, geothermal, and historical mining data for the region, and represent a significant potential contribution to Europe’s supply. However, analysts caution that such plans are at a very early stage, and it remains unclear how much lithium would ultimately be extracted economically and sustainably.
Atana is currently waiting to obtain local drilling permits, which will only be granted if it meets stringent environmental and safety standards. This regulatory hurdle is significant, particularly in densely populated and environmentally conscious regions like Germany and Poland.
“These (resources) are deeper and in jurisdictions that cost a bit more to develop, but there is certainly enthusiasm in Europe to develop these resources because of all the issues with critical mineral and supply chain security,” Wilson concluded. The higher development costs associated with deeper DLE resources in European jurisdictions are offset by the strategic value of localized, secure, and potentially more sustainable supply, aligning with the broader economic and geopolitical objectives of the continent.
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**Market Impact**
Atana Elements’ ambitious proposal carries significant implications across several market segments. For the **automotive industry**, successful local lithium extraction in Europe could de-risk EV production, stabilize input costs, and enhance strategic autonomy from volatile global markets and geopolitical pressures, directly supporting the “Made in Europe” battery and EV initiatives. **Commodity markets** could see increased diversification in supply origins, potentially tempering long-term price volatility once these unconventional DLE projects scale, although immediate impacts are minimal given the early stage. **Investors** in critical minerals and green technology are keenly watching DLE advancements, with Atana’s seed funding highlighting continued venture capital appetite for high-risk, high-reward solutions addressing the energy transition. Finally, on a **geopolitical level**, this project represents a tangible step towards Western nations’ broader goal of supply chain resilience and reducing economic leverage held by dominant producers like China, strengthening economic security and fostering regional industrial growth.