EIT InnoEnergy and Demeter Launched Battery Raw Material Fund

EIT InnoEnergy and Demeter Launched Battery Raw Material Fund

EIT InnoEnergy, the innovation wing for sustainable energy supported by the European Institute of Innovation & Technology (EIT), is a body of the European Union (EU), Demeter Investment Managers, a major European private equity and venture capital firm. Recently, they announced the launch of a fund dedicated to the development of a resilient and diverse battery raw material supply chain for Europe.

Creating A Resilient European Battery Industry

With a target size of €500 million, the ‘EBA Strategic Battery Materials Fund’ (EBA Materials Fund or the “Fund”) builds upon the success of the European Battery Alliance (EBA250) in its mission to create a resilient European battery industry. The fund was launched amidst soaring European demand for batteries which exposed a significant gap in the upstream (mining, processing) of the EU’s battery material supply chain. In line with the EU’s Critical Raw Materials Act (CRMA) requirements to decrease the EU’s overreliance on foreign supply, the fund aim to boost domestic capacities for strategic battery materials such as lithium, nickel, cobalt, manganese, and graphite.

Diego Pavia, Chief Executive Officer (CEO) of EIT InnoEnergy said, “To secure a thriving and resilient European battery industry, we must intensify our efforts in domestic battery raw materials production. 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). 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 claims to deliver.”

Lead by industry experts, Demeter is expected to act as fund manager, bringing its wealth of experience in GreenTech and infrastructure. EIT InnoEnergy is expected to tap into its sector heritage, evidenced by leadership of EBA250 since its inception in 2017, along with broader early-stage investment expertise to identify and support risky projects. Societe Generale can act as the exclusive financial advisor for the capital raising.

Commission Executive Vice-President Maroš Šefčovič in charge of the European Green Deal and the European Battery Alliance said, ‘“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.”

In the fund, at least 70% of investments from the EBA materials fund claims to be dedicated to projects increasing EU domestic production from mining, processing, refining and recycling in EU and neighboring countries. The remaining 30% is expected to be focus on increasing raw material supply from EU Raw Material Partnership countries, such as Canada, Namibia, and Argentina.

The EBA Materials Fund can support projects in obtaining the highest environmental standards, following the robust sustainability criteria set under the EU Battery Regulation on traceability, sustainability and circularity, and other criteria which are currently being set under the CRMA. The fund will have one of the highest ESG classifications as under article eight funds under the EU’s Sustainable Finance Disclosure Regulation (SFDR).