Geothermal Engineering Limited will invest about £43 million to extract lithium from hot underground brine in Cornwall, with nearly £10 million of UK government support. Commercial production is due in 2029.
At a glance
- The project aims to make about 1,500 tonnes a year of technical-grade lithium carbonate, enough for over 180,000 EV batteries.
- Government support comes from the DRIVE35 fund, which is also backing a £185 million lithium refinery in Teesside.
- The UK expects its lithium demand to rise by 1,100% by 2035.
Background
Geothermal lithium comes from hot water pumped up from deep underground. The water carries dissolved lithium, which is extracted before the water goes back into the ground. That is a different route from the hard-rock mines and evaporation ponds that supply most of the world's lithium today. Cornwall, a county with a long mining heritage, is where the UK is backing the method.
What happened
Geothermal Engineering Limited (GEL) will invest about £43 million in a new lithium operation in Cornwall, the UK government said on September 27. The project has an offer in principle of nearly £10 million from the DRIVE35 Automotive Transformation Fund.
GEL expects to begin commercial production in 2029. It plans to produce about 1,500 tonnes a year of technical-grade lithium carbonate, which the government says is enough for more than 180,000 typical electric car batteries.
Why the UK is paying for it
Britain wants more of its battery supply chain at home, and lithium is the gap. The government expects UK demand for lithium to grow by 1,100% by 2035.
The Cornwall project is one of two lithium investments announced together. Tees Valley Lithium will spend £185 million on a lithium refinery in Teesside, with £18.3 million from DRIVE35. Together the two projects unlock nearly £230 million of private investment. "Cornwall has a proud mining heritage, and companies like Geothermal Engineering are helping to write its next chapter," said Business Secretary Jonathan Reynolds.
What it means
At 1,500 tonnes a year, the Cornish project is small next to the big brine and hard-rock producers. Its value lies in giving UK battery and car makers a local source of lithium carbonate.
The project also arrives while the lithium market is weak, after prices fell sharply from their May peak. GEL's chief executive Ryan Law said lithium is "fundamental to the technologies underpinning the automotive sector's transition to zero-emission vehicles."
Our read
Outlook: neutral. About 1,500 tonnes a year from 2029 is too small to shift global lithium supply. The project matters for UK supply security rather than for lithium prices.
What to watch
- Whether GEL's DRIVE35 offer in principle becomes a final funding agreement.
- Construction progress toward commercial production in 2029.
- Progress on Tees Valley Lithium's £185 million refinery, which could process UK-sourced lithium.
For information only, not investment advice.
Lithium price in India
metalscost.com India reference price as of 2026-10-03.
Detailed analysis
Timeline
- 2026-09-27: The UK government announces DRIVE35 support for GEL's Cornwall lithium project and Tees Valley Lithium's refinery.
- 2029: GEL targets commercial production of lithium carbonate in Cornwall.
Demand Drivers
The UK expects lithium demand to rise 1,100% by 2035 as car makers shift to electric vehicles.
Supply Drivers
Geothermal brine extraction would add about 1,500 tonnes a year of UK lithium carbonate from 2029.
Government Policies
DRIVE35 grants of nearly £10 million and £18.3 million are backing two UK lithium projects worth about £230 million.
What could lift prices
- Government funding for new lithium supply shows long-term demand confidence from policymakers.
- A projected 1,100% rise in UK lithium demand by 2035 points to a growing European market.
What could weigh on prices
- New supply projects, even small ones, add to a market where prices have already crashed.
- Technical-grade output may still need further refining before it can go into batteries.
Country impact
| Country | Impact | Reason |
|---|---|---|
| United Kingdom | Medium | The project gives the UK a domestic lithium source and about 50 direct jobs in Cornwall. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| EV Battery Manufacturing | Positive | UK battery makers gain a potential local source of lithium carbonate from 2029. |
| Automotive Manufacturing | Positive | A home supply chain helps UK car plants meet their electric vehicle plans. |
Who gains, who loses
- Cornwall: The project brings nearly 50 direct jobs and about 80 more in the supply chain.
- Lithium importers to the UK: Domestic output could take a small share of the UK market they now supply.
Other ways this could play out
- If geothermal extraction works at scale, GEL could expand beyond 1,500 tonnes a year.
- If lithium prices stay low, private funding for UK projects could be harder to secure.
Price risks
- A strong lithium price recovery would make the project's economics look better than expected.
- Delays beyond 2029 would push back any UK supply benefit.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
Related
United Kingdom