Lithium Australia NL (ASX:LIT, OTC:LMMFF, FRA:3MW) is chasing a new kind of battery dream here in Australia: one where the cells powering the electric vehicle (EV) age don’t require cobalt or nickel.
As lithium prices soar to new heights and manufacturers turn to batteries with fewer raw materials, LIT has positioned its nanotech-centric subsidiary, VSPC, to pursue opportunities in the Australian market.
VSPC creates the specialised lithium cathode powers that help power batteries — already, the subsidiary is considering commercial opportunities overseas, but a grant opportunity could see it focus on home soil.
With lithium on its best bull run in years — and showing no signs of slowing down — LIT believes there’s scope for VSPC to contribute to a supply chain for Australia’s own lithium-ion battery (LIB) industry.
Speaking to the broader Australian market in an announcement on Friday, Lithium Australia managing director Adrian Griffin said: “To develop renewable energy security, Australia requires a domestic battery supply chain.
“Pragmatic political policies and government support are a step in the right direction and the Modern Manufacturing Initiative – Collaboration Stream grants will hopefully provide some of that support.
“The shortage of nickel- and cobalt-free cathode materials outside China is of great concern; however, the possibility of producing such material here in Australia has garnered enthusiastic support – from local miners right through to international battery producers."
“This country needs to act now, building on its resource base and developing the value-add that can position Australia as a leader in the new energy revolution.”
Lithium Australia managing director Adrian Griffin believes Australia needs a domestic battery supply chain. Source: Lithium Australia.
Lithium Australia and VSPC’s interest in the Australian battery market comes as a traditional type of cell, formulated with base metals like nickel and cobalt, wanes in the public eye.
That’s because cobalt- and nickel-free LIBs are safer, longer-lasting and, importantly, require less raw materials – including lithium – than cobalt- and nickel-based alternatives.
What’s more, the surging demand for electric vehicles has put a spotlight on the provisional nature of some mainstream battery resources.
Cobalt — which has previously been referred to as the ‘blood diamond of batteries’ — is currently a big part of the battery world, but it’s expensive to produce and much of its supply is linked to dangerous working practices.
Cobalt mining is forecast to drop off in the coming years. Source: Element 25.
It’s part of the reason why the demand for cobalt- and nickel-free LIBs across the EV and stationary energy storage markets is surging.
A transition away from materials like nickel and cobalt could only come about with a viable alternative.
And so, in 2020, EV titan Tesla Inc (NASDAQ:TSLA) and automotive company BYD Co heralded the move towards lithium iron phosphate (LFP)-type LIBs.
Essentially, these types of batteries contain no cobalt or nickel and use 20% less lithium per unit of stored energy when compared with their more common cobalt- and nickel-based competitors.
Importantly, too, LFP batteries are much safer, which is why many automotive manufacturers now offer entry-level EVs powered by LFP batteries.
Last year, BYD also began producing its own LFP-based batteries, cells that boasted an energy density increase of more than 30% and a 30% reduction in materials.
Earlier this week, Argus Media reported that LFP batteries accounted for 52% of total LIB production in the first eight months of 2021, tipping the scales to LFP dominance.
With fewer raw material requirements, LFP-type LIBs are gaining a critical cost advantage as well, given that the price of spodumene — the principal hard-rock lithium source — has more than doubled since late July.
Dubbed the new “white gold”, it’s clear this battery metal is in high demand, with the price of battery-grade lithium concentrate up by 144% this year.
Lithium’s continued popularity can be seen on our own shores: earlier this week, large-cap lithium player Pilbara Minerals Ltd (ASX:PLS) snagged a staggering US$2,240 per tonne bid for 8,000 tonnes of spodumene concentrate.
On a pro-rata lithia basis, this is roughly equivalent to USD$2,500 per dry metric tonne.
The bid is even more substantial when you consider the first auction in July of this year netted US$1,420 per tonne, marking a US$820 pricing increase in under two months.
So, why the price hike? It’s primarily linked to the burgeoning EV world.
In August alone, some 309,000 new-energy vehicles were produced in China – a figure up 180% from 12 months ago.
China is predicted to retain the largest EV market share through to 2030. Source: Deloitte Insights.
As electric vehicle sales continue to rise and the world scrambles to get its hands on more lithium, it seems the bull run is poised to continue.
However, there are some concerns about China’s ubiquitous battery production.
The manufacturing monolith is the world's largest producer of LFP and LFP-type LIBs by far, accounting for 98% of such battery production globally.
Amid the EV boom, there are calls for countries to develop their own battery mineral supply chains and reduce reliance on powerhouses like China.
Speaking on the burgeoning demand in Friday’s market announcement, Lithium Australia stated: “With those markets growing so rapidly and LFP now the dominant LIB chemistry, there could soon be little LFP available outside of China to satisfy current demand."
“With LFP set to take off, there is, therefore, significant growth potential for non-Chinese production of this commodity, regardless of scale, meaning that new LFP market entrants like VSPC are on the brink of an immense commercial opportunity.”
Lithium Australia’s nanotech subsidiary could become a key part of the nation’s battery industry through its supply chain.
The company has patented several processes to produce high-performance LFP cathode powder — a key component in battery cells — as well as high-energy-density variants that include lithium manganese ferro phosphate (LMFP).
Looking ahead, independent market forecasts conservatively project that demand for the cathode materials in Li-ion batteries will exceed US$10 billion by 2025.
Demand for cathode materials is poised to rise in the next few years. Source: VSPC.
These advanced battery materials are now being tested by cell manufacturers across the globe in countries like South Korea, France, Canada, Israel, China and Japan.
While VSPC continues to evaluate opportunities to expand its LFP and LMFP production to a commercial-scale offshore, it has also applied for a Modern Manufacturing Initiative – Collaboration Stream grant from the federal government.
This initiative offers between $20 million and $200 million to large-scale manufacturers that are working on projects that are considered “transformational”.
If its bid is successful, the funding could help VSPC develop a supply chain for the battery industry right here in Australia.
Lithium Australia continued: “Security of supply of critical materials for battery production – from mining all the way through to LIB manufacture – is (or should be) a matter of national significance.
“In Australia, there is the potential to create a new LIB industry and retain much of the downstream value of lithium mining for the benefit of everyone in the country."
LIT's subsidiary isn't the only one determined to contribute to a different kind of battery development.
At the Monash Energy Institute, researchers are investigating how sugar can create a longer-lasting, lighter and more sustainable rival to lithium-ion batteries.
The Monash Energy Institute team (L-R): Mahdokht Shaibani, Mainak Majumder, Matthew Hill and Yingyi Huang. Source: Monash Energy Institute.
While working on lithium-sulphur battery technology last year, the team demonstrated it could open the structure of a cell's sulphur electrode to accommodate expansion and make it more accessible to lithium.
Now, by incorporating sugar into the web-like architecture of the electrode, the team has stabilised the sulphur, preventing it from moving and blanketing the lithium electrode.
If developed for electric vehicles, this kind of battery technology could help you get from Melbourne to Sydney on just one charge.
The program's lead author, Professor Mainak Majumder, told Proactive this sugar-coated battery design had great potential.
"It promises to have about fivefold energy density compared to a regular lithium-ion battery, meaning you can drive longer in an electric vehicle.
"The other advantage is that the ingredients needed to make it are readily available — it does not depend on scarce resources such as cobalt and nickel, so recycling this battery after a lifetime will be a lot easier."
Test-cell prototypes constructed by the team have been shown to have a charge-discharge life of at least 1,000 cycles, while still holding far more capacity than equivalent lithium-ion batteries.
“So each charge lasts longer, extending the battery’s life,” said first author and PhD student Yingyi Huang.
“And manufacturing the batteries doesn’t require exotic, toxic and expensive materials.”
Speaking to the road ahead, Professor Majumder admitted that Sony (NYSE:SNE) and Panasonic weren't built in a day.
"Next year, we [hope] to get to actual prototypes ... if we're able to achieve that kind of real prototype, I think we can bring a significant technology from Australia into the market."