Matt Atlas

Government, CEZ Sign Memorandum On Gigafactory

The state wants at least one project for a battery factory for electric cars, the so-called gigafactory, to be established in the Czech Republic, according to Deputy Prime Minister and Minister of Industry and Transport Karel Havlíček. Volkswagen (VW), which also includes the Czech carmaker Škoda Auto, and the Korean LG are interested. Havlíček and the CEO of ČEZ energy company Daniel Beneš today signed a memorandum to support the planned project. Havlíček stated that one of the sites considered for the construction of a factory for batteries for electric vehicles is the site of the former brown coal power plant Prunéřov 1, which ČEZ shut down last year.

The Czech government approved the wording of the memorandum signed on Monday. The material available to ČTK shows that the investment should amount to at least 52 billion crowns in the first phase and that at least 2,300 new jobs are expected to be created in connection with it. According to Beneš, the location of Prunéřov is also a favorite. “So far it looks like that,” he told ČTK.

Beneš further stated today that the planned construction of the gigafactory is related to the planned lithium mining in the Czech Republic. CEZ wants to decide on the plant for its processing next year and start production in 2025. According to him, a factory for batteries for electric cars could then stand in the Czech Republic between 2026 and 2028 under an optimistic scenario. He added that the amount of state support for the planned construction gigafactory is not negotiated at the moment, according to him it has direct support and tax relief.

“It would consist of direct support in the order of percentage units and indirect support in the form of tax breaks. It would also be about state investment in related infrastructure. But this is really not agreed, and what is negotiated must be confirmed in the European Commission, “Beneš told ČTK today. According to him, a significantly larger part should be invested by investors. “That is, not that it will be paid for by the state,” he said.

“It is not clear at this time what CEZ’s share will be, because both CEZ as a developer and a company that will supply land, energy supply, services around and lithium can meet there, so there should also be a technology partner and possibly a partner from “The two to three partners would put together part of the investment,” he added. He admitted that one of these partners could be Škoda Auto.

Last April, through Severočeské doly, ČEZ became the majority owner of Geomet, which holds preferential rights to explore for and use the lithium deposit near Cínovec in the Ore Mountains. The company holds 51 percent, 49 percent belong to the Australian company European Metals Holdings (EMH).

Lithium is considered the metal of the future, in the Czech Republic, according to estimates, there are about three percent of the world’s lithium sources – the vast majority in Cínovec and a small amount in Slavkovský les.

The deposit near Cínovec is the largest in Europe. The possibility of lithium mining in the Czech Republic became one of the topics discussed before the parliamentary elections in 2017. At that time, the former government led by the CSSD signed a memorandum on mining with the EMH shortly before the elections. The Czechia finally terminated the memorandum, and Prime Minister Andrej Babiš (YES) called it nonsensical and invalid several times.

According to the memorandum, ČEZ and the government together want to develop the entire battery value chain, covering a wide range of activities, from the extraction of raw materials to the processing of batteries for secondary use and their recycling. According to them, a large part of it should be placed in the Czech Republic. Havlíček stated today that due to the mass transition to electromobility, dozens of battery factories are to be established in Europe. “It is possible that there could be two similar projects in the Czech Republic in the future,” he added.

In the past three decades, hundreds of billions of crowns have been invested in the automotive industry in the Czech Republic. For example, Škoda Auto significantly modernized the yeast plant in the Rychnov region for more than nine billion crowns, and invested at least 18 billion in a new plant in Mladá Boleslav. The company’s total investments in the Czech Republic since 1991 after the merger with the Volkswagen Group have exceeded 300 billion crowns.

Foreign investments in the order of tens of billions of crowns in the automotive industry were then mediated by the government agency for business and investment support Czechinvest. The biggest event was the construction of the Hyundai car plant in Nošovice for 34.4 billion crowns. The second is the Japanese-French TPCA factory near Cologne for 23.5 billion crowns and the third Korean Nexen Tire with a tire plant for 22.8 billion crowns.