EIT and Demeter establish 500 million euro battery fund

EU-backed energy investor EIT InnoEnergy and venture capital firm Demeter Investment Managers announced a fund at the World Economic Forum in Davos to support the European battery industry. The goal is primarily to invest in upstream projects at an early stage.

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With a target size of €500 million, the ‘EBA Strategic Battery Materials Fund’ will build on the success of the European Battery Alliance in its mission to create a resilient European battery industry. In line with the requirements of the EU’s Critical Raw Materials Act to reduce the EU’s over-reliance on foreign supplies, the fund aims to increase the EU’s own capacity for strategic battery materials such as lithium, nickel, cobalt, manganese and graphite.

At least 70 per cent of the investments are to flow into projects in the EU and its neighbouring countries and the rest into the supply of raw materials for EU raw material partner countries such as Canada, Namibia or Argentina. The fund will only support projects that meet strict environmental standards and comply with the sustainability criteria of the EU Battery Regulation.

The initial situation is well known: The demand for batteries in Europe is growing by leaps and bounds – primarily, but not only, because of e-cars. However, production capacities for battery cells are still being built up on the continent, and Europe is also dependent on other countries for the extraction of raw materials and in the upstream areas (mining, processing) of the supply chain for battery materials. In many cases, this is China.

“While it’s encouraging to see a growing list of ambitious initiatives and financial stimuli from public and private players, their focus is typically on mature projects (post-Final Investment Decision),” said Diego Pavia, CEO of EIT InnoEnergy. “Yet these initiatives need a deal flow of de-risked projects, and therefore we also need a focus on early-stage upstream projects (scoping, PFS and DFS), committed to a sustainable, traceable and transparent battery materials supply chain – and that’s exactly what the EBA Materials Fund will deliver.”

For the fund, EIT InnoEnergy will use its industry experience “to identify and support high-risk projects”. Demeter will act as fund manager and “contribute his extensive experience in the environmental technology and infrastructure sectors”, according to the press release. The French bank Societe Generale will be the exclusive financial advisor for the fundraising.

“Demeter is delighted to launch this initiative together with EIT InnoEnergy, in a critical segment for European countries to succeed in energy and ecological transition,” says Antoine Troesch, Managing Partner of Demeter. “Demeter will bring its recognized expertise in green investments and its methodologies for ensuring those investments meet the highest ESG standards.”

Commission Vice-President Maroš Šefčovič, responsible for the European Green Deal and the European Battery Alliance, said the sourcing of raw materials for batteries is crucial. “The battery industry is of strategic importance and a key battleground for global competitiveness. Therefore, it is vital to continuously up our game, with securing battery raw materials being the single biggest task ahead. Today’s innovative announcement shows that we mean business – on both, boosting our domestic European capacities and bolstering diversification via trade and cooperation with reliable partners. We need to be strategic, bold, agile,” said Šefčovič.

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