The European Investment Bank (EIB) granted a loan of €125mn to Belgian technology company Umicore to build a cathode materials factory in the Polish town of Nysa, the EU’s lender said on June 15.

The cathode materials will be supplied to battery manufacturers of high-tech lithium-ion batteries that are primarily used in electric vehicles. Poland has long been an important location for various automotive industries because of its still relatively cheap yet skilled labour as well as capacity for efficient logistics to markets such as Germany.

The loan will cover approximately half of the project costs in the initial phase, the EIB said. Umicore’s investment will create around 350 full-time jobs. The company will also partner with the local engineering school. 

The fast-growing sector of electric vehicles is driven by the European Union’s ambitions to cut greenhouse gases’ emissions from transport. 

“The trend towards the electrification of the automotive industry is gaining ground and in this context, it is important to develop a European capacity across the full value chain of electric vehicle battery production,” the EIB’s vice president Teresa Czerwinska said in a statement.

Poland pledged in 2017 that it would create the legal environment and infrastructure to boost the number of electric cars – including the e-vehicle that Poland wants to develop and manufacture domestically – to 1mn by 2025. These plans have been revised since to 600,000 e-cars and hybrids.