VSPC Subsidiary Well Placed To Benefit From Demand Explosion
Lithium Australia (ASX:LIT) says it is anticipated that Lithium ferro phosphate (LFP) will become the fastest growing sector of the Lithium-ion Battery (LIB) market, particularly with respect to electric vehicle (EV) penetration into the automotive market.
Managing Director, Adrian Griffin, says the company’s subsidiary VSPC Ltd is particularly well placed to benefit from what is forecast to be a 500% explosion in LFP demand by 2030.
“Lithium Australia subsidiary VSPC Ltd has patented processing technology for the production of advanced LFP cathode powders, a market forecast to grow 500% by 2030,” Mr Griffin told shareholders.
“Cost, safety and performance advantages are driving manufacturers towards LFP batteries for both EV and energy storage applications.
“The use of LFP simplifies the supply chain and reduces exposure to critical metals … nickel and cobalt in particular. Only 2% of global LFP cathode powder production occurs outside China, whereas future jurisdictions of high demand are likely to include Europe, India and North America. This creates a real opportunity for the company.”
Mr Griffin said EVs offer the potential to reduce the rate of climate change, as do BESS for renewable energy. Together, these technologies are contributing to the shift away from fossil fuels worldwide. That said, the resultant boom in battery production is placing supply-chain stress on the materials required, in particular nickel (Ni) and cobalt (Co), which are integral to the LIB types preferred by EV manufacturers in the western world. Hence the growing popularity of LFP-type LIBs. Indeed, many factors will contribute to the growing demand for LFP, a market that is anticipated to increase five-fold by 2030.
He says of the many LIB types being considered as substitutes for NCM and NCA, most are in the early stages of commercialisation. Only one, LFP is already widely available, and deservedly so, since it exhibits superior safety, longer life and lower cost, which are but a few of its benefits. A comparison of the main performance characteristics of the principal LIB types, as published by the Battery University
In addition to the attributes described above, LFP is a great candidate for future LIB applications since, compared with NCM and NCA, it contains less lithium and no nickel or cobalt whatsoever. Moreover, as battery recycling becomes the norm, use of LFP can ease supply chain pressure, as well as risk, by reducing the complexity of managing three critical components, lithium, nickel and cobalt, to just one – lithium. Similarly, use of LFP can reduce the environmental impact of the battery industry.
To date, LFP’s one major shortfall has been its lower energy density in comparison to the other LIB chemistries. However, this is now being countered by the use of more efficient cell geometry and modifications to the LFP chemistry itself, mainly through the addition of manganese to produce lithium manganese ferro phosphate (‘LMFP’).
Over the past several years, as a means of combatting climate change, many governments globally have set higher targets for EV utlisation. But, to achieve EV penetration rates of around 40% by 2030, battery manufacturing capacity has to increase five-fold to around 2000 GWh annually.
Over the last 12 months, global demand for LFP has increased over 25%, bringing Chinese LFP cathode powder manufacturing up to over 100 thousand tonnes per annum (‘ktpa’) – only 2% of global LFP cathode powder production originates elsewhere.
So, with many EV producers already manufacturing LFP-powered vehicles inside China, and making them available in other jurisdictions, North America and Europe are likely to be areas of high demand, with BESS and marine applications further increasing that demand. This creates a great opportunity to supply LFP into a market with little in the way of competition.
Global trends in LFP production are likely to follow that in China, where rising LFP demand, as forecast by Roskill (below), is likely to see LFP become the dominant LIB chemistry in the next few years.