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Czech CEZ provides funding for European Metals lithium project

Business and Finance

Demand for lithium, an important component in batteries, will grow as the electric vehicle market in Europe picks up steam.

Czech CEZ provides funding for European Metals lithium project

Czech conglomerate CEZ will provide a convertible loan of 2 million euros to European Metals Holding (abbreviated EMH), both companies said on Tuesday, with CEZ gaining a potential majority stake in EMH, which is developing a major lithium mine in the country.

The loan has a maturity date of December 31, 2019, and its interest rate is 7.5 percent. CEZ can convert the principal amount into shares at any time before maturity.

European Metals controls the exploration licenses for the Cinovec lithium /tin project in the Czech Republic, which it claims is the largest lithium mine in Europe.

Andriy Babis, Czech Prime Minister, backed the CEZ deal, in which the state owns 70 percent of the shares, saying that it allowed the country to retain control of important raw materials without compromising foreign investment.

European Metals is up 11 percent in London, while CEZ is up 0.4 percent in Prague.

“The potential partnership with CEZ further demonstrates EMH's commitment to develop the Cinovec project together with the Czech industry, given the country's interest in battery and electric vehicle manufacturing,” said EMH Managing Director Keith Kaflan.

Demand for lithium, an important component in batteries, will grow as the electric vehicle market in Europe picks up steam.

This is the first step towards implementing CEZ's new strategy for the electric vehicle market, which plans to deploy power plants throughout the country.

CEZ is obliged to make a decision on the acquisition of a stake in EMH by the end of the year.

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