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BASF makes low-nickel wager amid scramble for battery metals

Stock MarketsNov 23, 2018 06:30
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© Reuters. FILE PHOTO: Flags of the German chemical company BASF are pictured in Monheim

By Ludwig Burger

FRANKFURT (Reuters) - German chemicals giant BASF (DE:BASFn) is betting on a new recipe for electric car batteries which stretches the time between charges while cutting dependence on nickel to help shave costs and grab more of a growing market.

It is part of flurry of activity in the sphere of cathodes materials, a major component of battery cells for an anticipated switch to electric vehicles (EV) due to clean air regulation.

At the moment BASF and others, including Belgium's Umicore (BR:UMI), a market leader, are boosting the nickel content to allow more energy storage and replace expensive cobalt, which is largely sourced from mines in Congo, where exploitation is rife.

But BASF is also working on plans to cut the nickel content by more than half while increasing the proportion of cheap and abundant manganese, the company said in response to questions from Reuters.

"In addition, their cobalt-content will be below 5 percent with a target to produce these materials cobalt-free," it said.

Nickel currently makes up about 60 percent of cathode materials and companies including Umicore and BASF are pushing that up to 80 percent in product launches next year.

A slide from a BASF presentation from last year, seen by Reuters, envisaged a cathode materials product made up of just 20 percent nickel and 70 percent manganese in about 2021. It said that would cut costs to just over $40 per kWh of energy stored from well over $50 currently.

BASF was less specific in its latest statement to Reuters.

"The market will be ready to adopt such materials in some years from now," it said.

The company, which elbowed its way into the cathode market with a string of takeovers and investments from 2012 to 2015, competes with several big Asian manufacturers as well as Britain's Johnson Matthey (L:JMAT) and Umicore.

All three European players also produce catalytic converters for diesel vehicles, which are losing favour among regulators due to their emissions, adding urgency to their EV battery push.

Umicore declined to comment specifically on its nickel strategy; earlier this year, it said lifting nickel content was key to boosting a battery's energy density - or how much energy a battery can store - and some cobalt was needed for stability.

It has a leading position in high-nickel NMC-811, made up of 80 percent nickel, 10 percent manganese and 10 percent cobalt, and has said it is working to improve the product's durability over charging cycles and high voltage stability as well as focussing on recycling.

Johnson Matthey is developing a high-nickel cathode material, dubbed eLNO, which it says is safer, more cost efficient and stores more energy than current material.

Johnson Matthey's Chief Technology Officer Alan Nelson told Reuters that while the group was monitoring various technologies, it was not developing low nickel, manganese-rich cathoder materials because of "several key challenges to commercialization" including fading voltage over charge cycles.

EUROPEAN PUSH

The cathode materials business is a relatively small part of BASF, but it is one of Chief Executive Martin Brudermueller's flagship innovation projects aimed at lifting BASF's share price after a 20 percent rout since he took over in May.

Nickel, mostly used for stainless steel, costs about one fifth the price of cobalt. But BASF estimates that demand for high-grade nickel for electric vehicles will surge to 318,000 tonnes in 2025 from 25,000 tonnes in 2016. That would absorb 58 percent of global supply, in 2016 terms, compared with less than 5 percent in 2016.

Materials suppliers as well as carmakers such as BMW (DE:BMWG) and VW (DE:VOWG_p) are wary of shortages and have been pursuing contracts to secure long-term supplies.

The European Union and the German government are running projects to foster local production of battery cells https://tmsnrt.rs/2JnDSOX, most of which are now made in Asia.

Asian cathode suppliers include Sumitomo Metal Mining (T:5713) and Nichia (T:5658) from Japan as well China's Ningbo Shanshan (SS:600884) and Easpring (SZ:300073).

BASF has committed to building a cathode factory in Finland and is assessing several European locations for follow-up investments, including Schwarzheide in eastern Germany as part of a 400 million euro investment plan.

Johnson Matthey plans to spend 200 million pounds on an eLNO plant that could go on stream from 2021, while Umicore will invest 660 million euros (585.2 million pounds) in battery materials in China and Europe.

"Umicore does have a head start but the real growth will start in five to 10 years so it's not too late for the other producers," said Patrick Jahnke, portfolio manager at Deka Investments, which owns BASF stock.

BASF makes low-nickel wager amid scramble for battery metals
 

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