How Austria's Mining Sector Could be Invaluable to Europe and to Investors

The outlook for lithium

As electrification and clean energy continue to gain ground in the EU, demand for lithium, one of the core metals involved in electric vehicle production, has increased exponentially. In 2021 alone, lithium prices skyrocketed, rising by nearly 500 percent. It has been estimated that if supply does not increase significantly, an imbalance might hit as early as 2027.

"There's a growing disconnect between available supply and surging demand," explained Ken Brinsden, chief executive of Australian mining company Pilbara Minerals (ASX:PLS,OTC Pink:PILBF) "There aren’t enough projects that have been invested in the previous years that could come online. The short term response is definitely going to be tight. If only we had three years ago another mine fully funded when prices were low we would be in balance this year."

European Union: Critical metals and a green future

The EU participates in the European Climate and Energy Framework 2030, a program focused on practical objectives that can move the world towards net neutrality. It highlights how European solutions are needed to efficiently and cost-effectively bring security of supply and climate protection together in the energy transition. Pursuant to the European Green Deal, this continent plans to to become the first climate-neutral continent.

Economic importance and supply risk are the two most important parameters when determining criticality for the EU. The former deals in detail with the attribution of end users of raw materials on the basis of industrial applications. The latter parameter determines the concentration of global production of primary raw materials and supply to the EU at the country level, highlighting major suppliers like Austria. It also considers the governance of the supplying countries, including environmental aspects, the contribution of recycling, substitution, the EU's dependence on imports and trade restrictions in outside countries.

Largest producing mines in Austria

In 2016, Austria was home to more than 1,100 mining and quarrying operations, Materials produced by Austria include iron, graphite, salt, tungsten, magnesite, limestone, gypsum, anhydrite, kaolin, talc, leucophyllum, dolomite, quartz sand and oil shale.

Erzberg

The massive Erzberg open-pit iron mine is located in Eisenerz, Styria. Operated by Voestalpine (VIE:VOE), the mine is the site of the largest iron ore deposit in Austria. Located 60 kilometres northwest of Graz and 260 kilometres southwest of Vienna, it produces approximately 2.153 million tonnes of ore a year.

Mittersill

Located 30 kilometres south of Kitzbühel, the Mittersill mine is built atop the largest scheelite deposit in the EU. Also known as the Felbertal mine, MIttersill is a major source of tungsten trioxide, producing an average of 1,200 tonnes of the mineral per year. The mine is owned by Wolfram Bergbau und Hütten, a subsidiary of Swedish multinational engineering firm Sandvik (STO:SAND).

Hallein

Bordering the city of Salzburg, the federally owned Hallein salt mine is one of the oldest active mining sites in the world. Operational for over 7,000 years, the underground mine doubles as a mining museum. In 1829, the mine actually grew large enough that it crossed over the border to neighboring Bavaria, resulting in the Bavarian-Austrian Salt Treaty.

Kaisersberg

The last active graphite mine in the Alps, the Kaisersberg mine, first began production as early as 1755. It is owned by Grafitbergbau Kaisersberg, a privately owned business based out of the town of Kaisersberg. The mine is linked directly to both local and international railway systems for more efficient delivery.

Breitenau

Located in the province of Styria in Central Austria, Breitenau is one of the largest underground magnesite mines in the world, and the largest magnesite operations in Austria. It's owned and operated by Veitsch-Radex, a subsidiary of RHI Magnesita (LSE:RHIM). Veitsch-Radex also owns two other magnesite mines in Gulsen and Millstatteralpe/Radentheim.

Current mining exploration companies in Austria

European Lithium (ASX:EUR)

European Lithium's current project, the wholly owned Wolfsberg project, is located 270 kilometres south of Austria's capital, Vienna. Just east of the industrial town of Wolfsberg, it is comprised of 22 original and 32 overlapping exploration licences and a mining licence covering 11 areas. Situated close to comprehensive existing infrastructure, the project is built atop a foundation of extensive testing, exploration, mining and prefeasibility studies conducted by prior owners.

The current resource is 9.7 million tonnes at 1 percent lithium oxide. This paves the way for a definitive feasibility study slated for Q3 2022. The company believes that the mine has potential for a lifespan of between 12 and 15 years. Based on the prefeasibility alone, the net present value is at AU$862 million, though this is expected to rise to US$1.6 billion upon the new study’s completion. The mine is expected to commence production towards the end of 2024.

Richmond Minerals (TSXV:RMD)

A mineral exploration company that has been heavily engaged in exploration projects throughout Quebec and Ontario, Richmond Minerals recently expanded its focus from Canada to Austria with the Oberzeiring polymetallic project. Comprised of 99 claims near the village of Oberzeiring, the project is located at the site of what was formerly one of the largest silver mines in the Eastern Alps.

Aurex Biomining

Based in Switzerland, Aurex Biomining was the original owner of the Oberzeiring polymetallic project before selling it to Richmond. The company also maintains a gold project of approximately 20 square kilometres near the town of Pusterwald. The company is also pioneering a unique environmentally friendly biomining process.

Takeaway

Austria's mature mining infrastructure, industry-friendly regulatory climate, role in the automotive market and emerging mining projects make the country a strong contender for future investment. As the drive for electrification continues, the region has the potential to play a pivotal role in the development of the EU's lithium supply chain. Initiatives such as European Lithium’s Wolfsberg project have the potential to help immensely in this regard, particularly given Austria's proximity to multiple operating and proposed gigafactories.

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