Europe’s battery strategy is often dominated by discussions about lithium supply and graphite anode materials, but the success of the battery industry also depends heavily on other critical inputs, including manganese, nickel and cobalt.
These metals occupy a crucial position in the battery value chain, where mining, chemical conversion, customer qualification and commodity-price volatility intersect. While demand for battery chemicals is expected to grow alongside electric vehicle adoption and energy storage expansion, strategic importance alone does not guarantee commercial success. Companies operating in this sector must still overcome major challenges related to financing, technology, market cycles and industrial competition.
Euro Manganese’s Chvaletice Project Offers a Circular Economy Model
One of Europe’s most distinctive battery chemical developments is Euro Manganese’s Chvaletice project in the Czech Republic. Unlike traditional mining operations, the project is based on the recovery of manganese from historic mine tailings, turning legacy industrial waste into a potential source of battery materials.
The project aims to produce:
- High-purity electrolytic manganese metal (HPEMM)
- High-purity manganese sulphate monohydrate (HPMSM)
Both products are important for modern battery manufacturing, particularly for cathode materials used in electric vehicles.
According to the project’s 2026 preliminary economic assessment, Chvaletice has an estimated:
- Post-tax NPV (8%) of US$492 million
- Post-tax IRR of 13.8%
- Annual HPMSM production capacity of approximately 150,000 tonnes
- Projected operating life of 26 years
Initial Phase I development capital is estimated at around US$627.5 million, while a planned Phase II expansion would require approximately US$197.8 million.
Strategic Advantages Do Not Remove Financing Challenges
Chvaletice has several characteristics that align with Europe’s critical minerals strategy.
The project offers:
- Domestic EU supply of battery chemicals
- A circular economy approach through waste recovery
- Strong material traceability
- Potential reduction of dependence on imported manganese products
The transition from a positive economic study to a producing facility remains a major challenge. A preliminary economic assessment does not represent a fully financed project. Euro Manganese must still secure:
- Final feasibility studies
- Customer qualification
- Long-term offtake agreements
- Final permits
- Land access arrangements
- A complete financing package
With total planned investment approaching US$1 billion, securing capital will be one of the company’s most important milestones.
Terrafame Shows Both the Opportunity and Risk of Battery Chemicals
Finland’s Terrafame provides a real-world example of European battery chemical production already operating at industrial scale. The company produces nickel sulphate and cobalt sulphate for battery markets, supplying materials used in electric vehicle battery manufacturing.
According to Finnish Minerals Group, Terrafame’s production capacity is sufficient to support nickel sulphate demand for approximately 1 million electric vehicles and cobalt sulphate demand for around 300,000 electric vehicles. The company also demonstrates the volatility of the battery materials market.
Reported industry developments showed that Terrafame faced workforce adjustment discussions after weaker electric vehicle demand growth and lower battery chemical prices affected market conditions. The lesson is clear: even strategically important battery suppliers are not immune to commodity cycles.
Battery Chemical Markets Remain Highly Cyclical
The battery materials sector is exposed to multiple market pressures, including:
- Electric vehicle demand fluctuations
- Changes in battery chemistry
- Chinese production expansion
- Nickel price movements
- Cobalt price volatility
- Customer inventory adjustments
For example, changes in cathode technology can significantly affect demand for specific metals. The growing adoption of lower-cobalt battery chemistries has already changed expectations for cobalt consumption, while nickel demand depends heavily on the development of high-energy-density battery technologies. As a result, battery chemical producers must constantly adapt to shifting market conditions.
BASF Highlights the Importance of Permitting Risk
The challenges facing Europe’s battery chemical industry are not limited to smaller developers. Global industrial companies can also face delays caused by regulatory issues.
BASF’s Harjavalta precursor cathode active material project in Finland demonstrates this risk. The company encountered uncertainty after permitting issues temporarily affected the development timeline for its battery materials facility. The situation highlights a broader reality: even financially strong industrial groups must navigate complex environmental approvals and regulatory requirements before bringing battery projects online.
Strategic Materials Require Strong Business Models
The growing demand for manganese, nickel and cobalt chemicals creates significant opportunities, but strategic importance alone does not guarantee profitability.
Successful battery chemical companies will need to combine:
- Reliable raw material supply
- Advanced processing technology
- Consistent product quality
- Customer approvals
- Competitive energy costs
- Strong financing structures
- Ability to survive commodity downturns
The industry is moving away from a simple resource-development model toward a more complex chemical manufacturing environment.
Investors Must Look Beyond the Critical Mineral Story
For investors, Europe’s battery chemical sector requires careful differentiation. Euro Manganese offers a compelling circular economy and European supply security narrative, but still faces the challenge of financing a major industrial project.
Terrafame demonstrates that Europe can successfully operate battery chemical production facilities, while also showing how vulnerable margins can become during weak market conditions. BASF illustrates that even large multinational companies face regulatory and permitting challenges.
The conclusion is straightforward: Europe needs secure supplies of manganese, nickel and cobalt battery chemicals, but the market will ultimately reward only those companies capable of producing these materials efficiently, consistently and profitably. Strategic importance creates opportunity — but execution determines value.
