Infinity Lithium Corporation Ltd (ASX:INF) (FRA:3PM) has welcomed a €4.33 billion commitment in funding by the Spanish Government aimed at turning the country into a European electromobility hub, under the national strategic projects’ mechanism ‘PERTE’.

This announcement by Prime Minister Pedro Sánchez to kick start the production of electric vehicles and lithium-ion batteries will be achieved through an initiative funded predominantly by EU Next Generation recovery and resilience funding.

The government will stimulate private investment aligned to commitments for Strategic Projects for Economic Recovery and Transformation (PERTE), which will include the whole production chain from extracting lithium to assembling battery cells and manufacturing electric vehicles.

As investors see the potential flow-on benefits for Infinity’s San José Lithium Project, the company’s shares have soared by up to 40% this morning to A$0.16, a new three-month high, on strong volume of more than 19.5 million.

Sánchez highlighted that as part of Spain’s transition to electric mobility, the automotive industry sector share of national GDP would increase by 50% to 15% of total GDP by 2030.

“One of the biggest” projects in Europe

He said: “It will be one of the biggest projects, not in Spain, but in Europe, in recent decades.

“The government firmly believes in the capacity, the industrial potential of our country to face this challenge, which will affect the entire production chain from the extraction of raw materials such as lithium.

“In short, the automotive industry is going to receive public support throughout the manufacturing process.”

Sustainable transformation commitment

PERTE is part of a €13 billion commitment to the sustainable transformation to eMobility.

Spain is expected to receive €70 billion in grants from the €140 billion committed in grants and low-interest loans under the EU’s €750 billion recovery and resilience packages.

Once the PERTE is published in the official state gazette Boletín Oficial del Estado (BOE), the different interested companies will be able to register the groupings to participate in it and, in September, to start the process of the calls to demand resources from the European Union.

Vertically integrated battery supply chain

In addition to PERTE, the Council of Ministers have approved funding of a further €40 million aligned to Spain’s sustainable automotive technology plan.

INF’s San José Lithium Project in Spain is a fully integrated industrial project focused on the production of battery-grade lithium chemicals from a mica feedstock that represents the EU’s second-largest JORC-compliant hard rock lithium deposit.

It has the potential to provide an essential component in the EU’s development of a vertically integrated lithium-ion battery supply chain.

The availability of critical raw materials and the production of battery-grade lithium hydroxide in the EU is essential to ensure the long-term production of lithium-ion batteries for eMobility and the transition of the burgeoning automotive industry to electric vehicles.

Infinity Lithium has recently signed an MoU with global leading lithium-ion battery producer LG Energy Solutions for the potential long-term supply of battery-grade lithium hydroxide.

Both parties are working towards the completion of a binding offtake agreement within the next 12 months