Battery raw materials in the M&A data room: postponed EU due diligence and supply-chain evidence

The role question comes first. The Batteries Regulation applies specific due diligence duties to economic operators placing certain batteries on the Union market. This includes, in particular, industrial batteries with internal storage above 2 kWh, electric vehicle batteries and starting, lighting and ignition batteries. The data room should show whether the target is a manufacturer, importer or another economic operator and which batteries actually fall within scope.

The raw-material profile comes next. The rules address cobalt, natural graphite, lithium and nickel, as well as the supply chain for their extraction, processing and trading where those materials are used for battery manufacturing. A general ESG policy reference does not answer the deal question. Buyers need a link between battery products, materials, suppliers and responsible personnel.

Regulation (EU) 2025/1561 postponed the start of the relevant duties by two years to 18 August 2027. This matters for contract planning. A target may still be before the formal application date at signing while it already needs substantial preparation. Buyers should distinguish current structures, short-term measures and later ongoing duties.

The postponement is not a general release from existing supply-chain risks. Contractual commitments, customer requirements and the commercial effect of weak raw-material records may matter earlier. The purchase-price and integration plan should therefore include a separate milestone for preparation by 18 August 2027. The owner, budget and evidence belong in the closing or post-closing plan.

A reliable mapping connects each relevant battery product with its materials and suppliers. The buyer should request product lists, bills of materials or material information, supplier contracts, origin data, certificates, audit reports and existing risk assessments. The key is traceability: the records should show the path from the raw-material source through processing to the target’s battery production.

Gaps often arise when one supplier combines several processing stages or data exists only as a self-declaration. The data room should identify those assumptions expressly. The review should also cover escalation when suppliers do not respond, the quality of country and site data, and whether the target can change suppliers. A contractual duty remains weak in execution if the company cannot access reliable information.

Due diligence is more than a supplier list. The target needs a process to identify, prioritise and address actual and potential adverse impacts in the supply chain. The data room should therefore show internal ownership, the assessment method, escalation levels, complaints and remediation measures already adopted.

For the buyer, process maturity matters more than a general commitment. A policy that is not applied, documented and supported by management decisions can be a red flag. Suppliers with high economic importance, poor traceability or repeated unanswered requests deserve particular attention. The review should record whether the target can demand remediation, adjust the relationship or move to an alternative source.

The Batteries Regulation provides for a management system and review of the due diligence policy by an independent body. The data room should therefore contain internal policies, responsibility matrices, training and control records, audit reports and communications with the reviewing body. The buyer should distinguish an examination that is completed from one that has merely been commissioned or planned.

That distinction affects the SPA. A completed report does not automatically answer future questions if suppliers, products or processing stages change. For a planned examination, the buyer needs a timetable, a named owner and a rule for deviations. The SPA can address completion as an obligation, warranty, closing condition or indemnity, provided the risk allocation remains specific.

The SPA should reflect the reviewed raw-material scope and the state of preparation. A warranty may confirm which battery products and supply chains are covered, which policies apply and whether known risks have been disclosed. The disclosure letter should identify deviations specifically. A general promise to comply with environmental and sustainability rules offers little protection when the supplier chain is not described.

Open gaps call for graduated solutions. A purchase-price holdback can secure completion of defined evidence. A closing condition suits findings material to the acquisition. An indemnity can cover clearly defined legacy or transition risks. The contract should also state who communicates with suppliers, reviewers and authorities after closing and which information the seller must provide.