Germany is the European mecca of the combustion car. That Spain becomes the electricity supplier goes through Mérida and 800 million Chinese

Hunan Yuneng International Spain New Energy Battery Material SLU already has its excavator blades in Mérida. The Chinese battery manufacturing company You already have the land and have obtained the building license from the town hall, so the preparation work on the ground has already been visible for a few days. The speed with which one of the strategic electric car factories is materializing is scandalous: in February we were talking of environmental approval and be careful because it is expected that be operational at the end of the year. That Hunan Yuneng has achieved it in such a short time says a lot about both parties involved.

The factory is going from strength to strength. The plant will produce cathode materials for cells LFP batteriesmore specifically lithium iron phosphate, a technology that is emerging due to its lower cost, greater durability and better thermal resistance. As collects Badajoz Newsthis project involves an investment of close to 800 million, will have a productive capacity of up to 300,000 tons per year and will directly generate 500 jobs.

According to MotorpasiónIn this first phase there will be an initial investment of about 116–125 million euros of investment and about 160 direct jobs. One of the most revealing developments about the real status of the project is the appearance of an auxiliary satellite industry: the Chinese company Jinhong Gas has constituted formally in Mérida the company ‘Jinhong Gas (Spain) SL’ to directly supply the Hunan Yuneng plant with nitrogen, an essential element for the manufacture of LFP cathode materials.

Why is it important. Because it is one of the largest industrial investments captured by Extremadura and the first plant of this type in Europe, as explains the Junta de Extremadura. This makes Mérida strategic, a reference for the European automobile industry from the moment it is operational.

LFP batteries are the key to cheap electric cars: they are more affordable because lithium and iron are cheaper than nickel or cobalt and they are also safer and resist charging cycles better, which makes them more durable. It is true that its energy density is lower than those of NMC chemicals, but due to longevity and cost they are ideal in the entry or medium segment, precisely where Europe needs it most compared to China. Furthermore, producing the cathode material on European soil is almost a necessity by law and a process that opens doors to aid such as Auto+ plan.

Context: the lithium triangle. Extremadura has been gaining weight in the electric car supply chain for years. In Navalmoral de la Mata there is already a plant in the oven to produce complete batteries. It was initially intended for NMC batteries, but has pivoted to manufacture LFP accumulators.

On the other hand, in the surroundings of Cáceres it is believed that there is one of the largest lithium deposits in Europealthough exploiting it is another story: is paralyzed after the neighborhood opposition and environmental platforms. However, the European Commission has mineral and rare earth exploitation projects in its portfolio. three located in Extremadura of the seven total in the Spanish state. Unblocking it would mean that the region could control extraction, cathode material production and battery assembly, all in the same territory: just what the Critical Raw Materials Act It has been encouraging for years without much success.

The manufacturing of electric cars and their parts in Spain speaks Chinese. Chinese brands have understood that the way to avoid European tariffs on vehicles manufactured in China is that they have a shortcut to negotiations with Brussels: produce directly on European soil. Spain, which abstained from voting on those tariffshas become your favorite destination.

Yes, but. The structural weak point that we have already reflected but that is worth remembering: the factory will produce lithium iron phosphate, but the lithium it needs to do so will not come from Extremadura, but probably from Australia, Chile or again China. According to the IEA report on critical minerals 2023China controls more than 60% of global lithium refining, so strategic sovereignty is relative.

On the other hand, we also have to keep an eye on employment: the experience with other Chinese plants in Europe, such as lfrom CATL in Zaragozahas generated debate about what proportion of the initial qualified personnel comes from the investing country. It’s fine print that should be on the table and resolved before the machinery is operational.

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Cover | Michael Fousert and Rafa Esteve