The rise of cheaper LFP battery chemistries in electric vehicles has often been seen as a challenge to Australia\u2019s resource sector with nickel and cobalt on the outer
\nBut as LFP demand rises outside China, Western suppliers of commodities like phosphate, manganese and fluorspar could benefit
\nWhich Aussie manganese and phosphate players could get a shot in the arm from LFP batteries<\/p>\n
When the growth engine for demand for lithium ion batteries shifted from consumer electronics to electric vehicles, Australia became pretty bloody excited.<\/p>\n
Not only did we have the geology to dominate China\u2019s biggest industrial enterprise in steel through our world class supplies of iron ore and premium hard coking coal, now we had the highest quality reserves in the world of the metals that would help it and the world replace diesel and petrol cars with EVs for decades to come.<\/p>\n
That enthusiasm has been tempered somewhat by a couple of developments.<\/p>\n
Demand for lithium and nickel continues to grow. But so has supply \u2014 at a much faster pace \u2014 which has seen lithium prices fall 90% in the past year and nickel metal returns slide by half, prompting mine closures and production slowdowns among higher cost Australian operators.<\/p>\n
On top of that is the fear that the nickel-cobalt-manganese cathode which used to dominate the EV battery market will be superceded.<\/p>\n
While sodium ion batteries \u2014 which would eschew lithium altogether \u2014 appear some way off and are largely conceptual when it comes to their use in passenger EVs, a push by Chinese car and battery makers to lower cell costs has seen a chemistry called LFP (lithium-iron-phosphate) grab increasing market share.<\/p>\n
From 45% last year, Benchmark Mineral Intelligence thinks LFP chemistries will take almost half the battery cell demand in 2024 as Chinese EV producers seek to transition from luxury to consumer buyers.<\/p>\n
There is a growing push outside China to develop LFP capacity as well. From a low base, Benchmark\u2019s product director of battery chemicals Maximilian Court told delegates at last weeks\u2019 Benchmark World Tour, US production was expected to lift 280x, with production in Europe to lift 120x in the coming years, with more additional LFP supply expected out of Korea.<\/p>\n
Australia\u2019s geological attributes appeared almost perfectly suited to NCM batteries, especially with nickel rich chemistries on the rise, another gift from God to \u2018The Lucky Country\u2019.<\/p>\n
While it still needs lots of lithium, where Australia is the number 1 supplier by a country mile, the rise of LFP posed a major challenge to that myth, even before Indonesia\u2019s flooding of the nickel market sent Aussie mines into mothballs.<\/p>\n
But Court said there remained opportunities for Australia. While out iron ore industry doesn\u2019t supply products suited to LFP chemistries (and is seeing more than enough demand right now from steelmakers to put any existential fears into the distant future) there are other sectors where Australian miners can grab a foothold in the other side of the battery market \u2014 from phosphate to manganese and even the little known mineral fluorspar.<\/p>\n
\u201cThere\u2019s still a lot of threads that can be pulled on a WA and Australian story that can feed into all these different stages of the battery supply chain,\u201d he said.<\/p>\n
\u00a0<\/p>\n
There are two major commercial scale phosphate operations in Australia, both in north Queensland. One is Incitec Pivot\u2019s (ASX:IPL)<\/a> 975,000tpa Phosphate Hill mine, which produces a merchant grade phosphoric acid which is a feedstock for fertilisers used in cropping agriculture.<\/p>\n But higher grade feedstocks \u2014 like the 34% P2O5 rock extracted at Centrex\u2019s (ASX:CXM) <\/a>Ardmore project \u2014 can be used to make high purity (80%+) phosphoric acid.<\/p>\n This kind is an ingredient in LFP batteries.<\/p>\n Centrex recently raised $8 million to upscale from its current production rate of 240,000tpa to 625,000tpa over the next 12 months. Around 500,000t will go to Antipodean fertiliser producers, with the balance likely sold into Asia.<\/p>\n But CEO Robert Mencel said demand from the EV sector is rising, fielding his first calls on supplying LFP batteries from Ardmore around 12 months ago.<\/p>\n \u201cWe\u2019ve had inquiries from customers who make phosphoric acid for lithium iron phosphate batteries,\u201d he said.<\/p>\n \u201cIt\u2019s actually about this time last year that I got my first call from a battery manufacturer in China. He was seeking feedstock exactly for the purpose.<\/p>\n \u201cWe\u2019ve been doing test work on high purity phosphoric acid with Prayon, who are one of the leaders in the world (in phosphate processing). We\u2019ve sent products to Europe for test work and some of the initial feedback\u2019s been good. The initial results have been good. <\/p>\n \u201cThe demand for batteries is only part of it because Australia currently imports approximately around 30-40,000 tonnes a year of high purity phosphoric acid.\u201d<\/p>\n \u00a0<\/p>\n Batteries are just one use for high purity phosphoric acid \u2014 premium cleaning products, animal feed, food additives and obviously fertiliser are among the key end markets.<\/p>\n But EVs may have a larger impact on pricing than other sources, with demand from LFP battery producers expected to soar.<\/p>\n CRU Group thinks purified acid supply in North America and Europe may need to double by 2045, depending on how the global structure of the EV supply chain crystallises.<\/p>\n Currently China boasts around 99% of LFP capacity, and in a world that retains that status quo, it will likely procure most of its supplies from local producers. <\/p>\n But Western carmakers are growing increasingly interested in LFP in a world where they know EV costs need to come down, lest Chinese auto firms like BYD corner the budget market. If America and Europe could fully localise their LFP production however, CRU says demand for high purity phosphoric acid would lift 60% and 90% respectively by 2045 and 80 and 130% respectively in a high LFP demand scenario.<\/p>\n Benchmark\u2019s Court noted not all phosphates are suitable. The level of impurities in the rock is an important consideration.<\/p>\n \u201cYou can make lots of fertiliser products out of phosphate which have impurities and heavy metals involved, but those typically aren\u2019t suitable for a battery because it can cause a reduction in performance and also safety concerns too,\u201d he said.<\/p>\n \u201cSo what we need to see for that part of the ecosystem is roughly 2.5 million tonnes of projects coming to fruition to solve a deficit of about 700,000 tonnes by 2030.\u201d<\/p>\n Mencel said many sources of phosphate were high in cadmium, a big stumbling block when it comes to refining to the purity required for battery product.<\/p>\n \u201cSome of these other high grade phosphate rock operations, they might go 40 to 60 to 80ppm cadmium. And the problem with that is it requires more sophisticated purification processes, because you have to remove the metal within the phosphoric acid. So the other things that people look for are copper, zinc, lead.\u201d<\/p>\n ESG considerations will be important as well. While China could export phosphoric acid and LFP batteries to international carmakers depending on policy settings, the thermal cracking process is energy intensive and polluting compared to the hydrometallurgical processes used in the West. <\/p>\n \u00a0<\/p>\n While manganese has long been a part of the NCM story, it is increasingly being used to dope LFP batteries to improve their energy density in a bid to bring their charge time closer to premium NCM models.<\/p>\n This will go some way to reducing \u2018range anxiety\u2019, referring to the concerns ICE drivers have that they will not be able to drive for long periods of time without stopping to recharge their batteries.<\/p>\n While manganese prices are at cyclical lows right now, Court said the growth of manganese use in LFP chemistries could shift the market or battery grade manganese into deficit by 2030.<\/p>\n \u201cThere are market sources out there that expect something like 100 gigawatt hours of LMFP capacity by 2025 so there\u2019s strong uptake and lots of different companies making their own recipes around that kind of chemical balance,\u201d Court said.<\/p>\n One of Australia\u2019s few active manganese producers \u2014 Element25 (ASX:E25)<\/a> \u2014 has already secured the support of Western auto giants Stellantis and General Motors to build a high purity manganese sulphate plant in the United States, supplied by material from its Butcherbird mine in the Pilbara.<\/p>\n \u201cIn the LMFP side of life there\u2019s two basic raw materials that they need. One is the manganese sulphate which is broadly the same as the manganese sulfate they need for NMC cathode manufacturing,\u201d MD Justin Brown told Stockhead<\/em>.<\/p>\n \u201cBut the other one is manganese carbonate which goes into a different LMFP flowsheet. So in our case to produce carbonate we would basically convert our sulphate to carbonate and deliver into that supply chain.\u201d<\/p>\n Brown said the improvement in the demand outlook for manganese \u2014 largely used in the steel industry \u2014 could be \u2018potentially huge\u2019.<\/p>\n \u201cThey basically go from in the latest generation of NMC 8-1-1 chemistries, which has around 10% manganese, the LMFP chemistries have about 70% manganese,\u201d he said.<\/p>\n \u201cIf you use a 9-5-5 chemistry NMC you\u2019re almost talking 15x uplift. So somewhere between that sort of seven and 15 times demand growth is what the prize is.<\/p>\n \u201cThey\u2019re not the only chemistries either. You\u2019ve got LMNO (lithium-manganese-nickel-oxide) as well, which a number of companies are working on, and you\u2019ve got LMRs which is sort of a bag term for lithium manganese rich, which are not strictly LFPs, they\u2019re other flavours of high manganese cathodes and you\u2019ve seen Umicore out and announce that they\u2019re bringing to market high manganese cathode materials next year. <\/p>\n \u201cSo I think on a number of fronts you\u2019ve got this shift to manganese as one of the potentially dominant cathode materials and that\u2019s because there\u2019s a net reduction in cost per kilowatt hour. There\u2019s an improvement in the availability because manganese is just fundamentally more abundant than nickel and cobalt. <\/p>\n \u201cAnd then you\u2019ve also got the power improvement over traditional LFP.\u201d<\/p>\n \u00a0<\/p>\n So which ASX players have made moves to participate in this market?<\/p>\n On the manganese side some of the big producers are looking to access the high purity manganese sulphate market, notably South32 (ASX:S32)<\/a>, which thinks the Clark deposit at its Hermosa project in Arizona where it will first develop the $1.7 billion Taylor zinc-lead-silver mine could be used to go upstream.<\/p>\n It also owns major manganese operations in South Africa and at GEMCO \u2014 one of the world\u2019s highest grade and cheapest manganese operations in the Northern Territory \u2014 but is less likely to go the battery manganese route at those mines, which are already established and have shorter lives ahead of them.<\/p>\n Jupiter Mines (ASX:JMS)<\/a> owns around half of the Tshipi mine and has flagged the potential to have a HPMSM plant operating by 2027-2028 having produced the first 99.9% pure HPMSM in South Africa last year.<\/p>\n Firebird Metals (ASX:FRB)<\/a>, which owns the Oakover project in the Pilbara, has announced plans to study a Chinese based HPMSM plant utilising feed from its Aussie deposit.<\/p>\n When it comes to phosphate, RareX (ASX:REE)<\/a> is another Aussie player which has touted the potential to supply product to the LFP market.<\/p>\n With a unique blend of marketable phosphate and rare earths oxides, the junior released a strategic project update in October last year showing it could supply 12,000t of rare earths oxides and 169,000t of \u2018battery grade phosphate\u2019 for 15 years from its Cummins Range project in WA\u2019s Kimberley region.<\/p>\n That would see it play into the EV market both in the supply of magnet metals for motors and LFP battery cells, with its material potentially substantive enough to supply 2.5 million EVs a year. <\/p>\n REE also signed a MoU for offtake with Nitron for its phosphate to be used in fertilisers, with Nitron signing up to purchase 250,000t of 25% P2O5 DSO for the first stage of its offtake deal from 2025 and 250,000tpa of upgraded 32% P2O5 from 2028.<\/p>\n An updated resource last month showed Cummins Range holds some 524Mt at 0.31% TREO and 4.6% P2O5 for 1.6 million tonnes of contained TREO and 24 million tonnes of contained P2O5.<\/p>\n Minbos Resources (ASX:MNB)<\/a>, which owns the Cabinda project in Angola, has also reported receiving inbound inquiries from battery makers who view the grade and impurity profile as favourable for use in LFP cells.<\/p>\n There have been companies looking to go as far as producing LFP in Australia. Avenira (ASX:AEV)<\/a>, which owns the Wonarah phosphate and yellow phosphorous proposal near Tennant Creek in the NT, has proposed to produce cathode active material for LFP batteries at a plant in Darwin using technology developed by a Taiwanese company called Aleees.<\/p>\n \u201cOur recent engagement with global car manufacturers has validated our selection of Aleees as our technology partner. It has also highlighted, very clearly, how important LFP is in the selection of batteries for the electric vehicle industry in the next few years,\u201d AEV executive chairman Brett Clark said on announcing an extension to its time to make a stage US$2m payment to Aleees under its licence agreement in November. <\/p>\n \u201cLFP chemistries are forecast to take an increasing share of the battery market for the electric car and light vehicle sector. Avenira aims to capture a meaningful share of the ex-China market for LFP.\u201d <\/p>\n Lithium Australia (ASX:LIT)<\/a> also announced an MoU with Canada\u2019s First Phosphate to pursue \u201cthe potential development of a lithium iron phosphate (LFP) and lithium manganese iron phosphate (LMFP) cathode active material manufacturing plant in North America.\u201d<\/p>\n Also playing a role in LFP batteries is fluorspar, which is used not in the cathode but in the electrolyte.<\/p>\n The price of acid grade fluorspar hit record highs in US dollar terms in 2023, with Tivan (ASX:TVN)<\/a> announcing plans earlier this year to conduct a pre-feasibility study on the fluroite resource at its Speewah project after the Australian Government designated the commodity as a critical mineral in December.<\/p>\n At Stockhead we tell it like it is. While RareX was a Stockhead advertiser at the time of writing, it did not sponsor this article.<\/em><\/p>\n <\/span><\/p>\n The post EVs are using less nickel and cobalt as carmakers aim for budget prices, and that might actually be good for these Aussie miners<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Batteries could see North American and European market double<\/h2>\n
The battery manganese story<\/h2>\n
Which ASX players are in this market?<\/h2>\n