VSPC – Lithium Australia’s nanotechnology cathode division – to enter the battery supply chain.

| Brisbane, AUSTRALIA|

“VSPC produces some of the most advanced LFP cathode powders available and has
struck a number of deals to pave the way for first commercial production in the near
future. The first stage of development will allow market penetration with minimal capital
investment and is a convenient means of establishing a customer base. The second
stage will enable delivery into expanding and more lucrative markets.”

Arian Griffin

Managing Director

Lithium Australia NL

As Chinese automakers awaken from their COVID slumber, battery demand is expected to rise. Fundamentals for reinvigoration of the supply chain look bright, particularly for lithium ferro phosphate (‘LFP’) batteries, which have found their niche in low-cost electric cars, buses, trucks and rail and in energy-storage applications, not to mention as a replacement for lead-acid batteries in various other forms of transport and communication.

Lithium Australia subsidiary VSPC Ltd (‘VSPC’) is on course to enter the commercial battery space through the supply of LFP cathode powders to battery manufacturers, including DLG Battery Co. Ltd (China). This is very much a low-capital entry for VSPC, which plans to use established facilities initially, thereby enabling it to develop a client base before committing to more independent methods of production.

VSPC’s plans, released to the market on 6 May 2020, outline the anticipated build-up of production to 5000 tonnes per annum of cathode powder, in readiness for the growing penetration of LFP batteries into global markets. The world is beginning to realise that such batteries, with their unsurpassed safety credentials and superior performance, are the ideal power-storage medium in many areas.
The move to LFP batteries
LFP batteries provide significant benefits over other established lithium-ion battery (‘LIB’)
chemistries; in particular, nickel-cobalt-manganese (‘NCM’) LIBs. Importantly, LFP
batteries offer the following advantages:

lower production costs;
more sustainable metal inputs;
greater longevity;
a wider operational temperature range, and, above all,
greater safety (little probability of thermal overrun and fire during normal operation).

Further research on LFP derivatives is likely to narrow the comparative energy-density
gap between LFP and NCM battery types, and major battery producers are investing in
expanded production, not only for electric vehicle (‘EV’) and energy storage applications
but also for the booming lead-acid battery replacement market. This environment has
seen new investment in LFP batteries by Contemporary Amperex Technology Co. Ltd
(CATL) and even LFP-powered Teslas being planned for China.
Meanwhile,
manufacturers of traditional lead-acid batteries are gearing up to produce LFP batteries
and in so doing avert a fate similar to that of Kodak all those years ago. In China, the market for LFP battery-powered trucks and buses is strong, with reduced
subsidies in that country driving consumers towards lower-priced EVs in which the use of
LFP batteries dominates.
Having adopted a two-stage approach to entering the commercial battery market, VSPC
will begin with cathode powder production in China through already established
manufacturing facilities. VSPC is negotiating with Chinese process technology company Beijing Saideli Technology Incorporated Company Ltd (SDL) to
produce LFP to VSPC specifications in an existing SDL plant.
The structure of the pending agreement will not only allow VSPC market entry with little capital expenditure but also meet the final hurdle, that being cost, in its agreement with DLG Battery Co. Ltd (Shanghai) and achieve preferred supplier status. That will occur subsequent to VSPC product meeting DLG’s electro-chemical and physical specifications for LFP cathode material, as tested in commercial-format cells manufactured by DLG.
VSPC plans initial production of up to 1,200 tonnes per annum to supplement
Chinese supply and also test markets elsewhere. To that end, VSPC is in discussions
with cathode producers for the supply of 500-1000 tpa in various jurisdictions by 2022.
While COVID-19 has had an impact on markets everywhere, a rapid recovery in China’s
domestic market for LFP is likely. VSPC will expand its strategy by conducting a
definitive feasibility study on a commercial plant outside China in 2021. VSPC research has been augmented by the federal government via an Advanced Manufacturing Growth Centre (AMGC) grant to evaluate low-cost process consumables, as well as a Co-operative Research Centres Project (‘CRC-P’) grant, which will see VSPC partner with CSIRO, the University of Queensland and others to develop a rapidcharge battery for use in public transport applications, light rail in particular.
Competitive advantage
VSPC’s undertaken cost analysis of competitive LFP production in China
anticipates the company being able to produce a product with better performance characteristics than those of competitors in the same cost bracket. The low-capital market entry has an estimated payback of two years and an EBITDA of US$3.4 million per annum. And, while this represents a modest market entry, longer-term development outside China includes much more attractive financial metrics. The second stage of VSPC’s anticipated approach involves expansion to a 5,000 tpa cathode powder production plant that can service the fast-growing international markets.