High Voltage: These are the ASX small cap stocks taking Australia’s battery industry downstream
Link copied to
Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, manganese, magnesium, and vanadium.
Australia is a global mining leader, but things fizzle out as we go downstream.
Downstream – chemicals, anode/cathode, and battery production – is usually where the big margins are.
It’s also generally more complex, which is why China, with its decades of experience, leads the world in downstream processing of battery raw materials.
The US, in a well-publicised move, is looking to change that.
It recently introduced the Inflation Reduction Act, a mammoth package of policies and incentives targeting US$369 billion ($520 billion) of clean energy and climate change initiatives.
This is already acting as a powerful magnet for finance, workers, and tech manufacturing.
Clean Energy Council CEO Kane Thornton said Australia needs to do something similar or risk losing thousands of jobs and significant international investment to its North American ally.
“Australia has a prime opportunity to become a clean energy superpower, but the brightest minds and the biggest wallets are now looking to the US for their best opportunity,” Thornton says.
“It is immediately clear the US package dwarfs the level of support Australian governments provide for the clean energy transition.”
Which is understandable. The US is the biggest economy in the world, while Australia sits at #13 behind Brazil, Russia, and South Korea.
Still, we do have other advantages over the US; namely, that all the raw materials needed for the energy transition — lithium, cobalt, nickel, copper, manganese, vanadium – can be mined and processed right here.
But Thornton says Australia still requires a “coherent masterplan” to become a global energy superpower and called on the Federal Government to formally articulate its strategy.
This seems to be happening. The Federal Government has already requested a detailed analysis from Dr Alan Finkel on the implications of the Inflation Reduction Act, he says.
Meanwhile, last Friday, Federal Minister for Science and Industry Ed Husic visited the 4000sqm ‘Gigafactory’ of unlisted company Renaissance One in NSW to announce consultation for the country’s first National Battery Strategy.
“Our general approach should be one where if we mine it here, we should make it here,” Husic says.
“Global demand for existing and next-generation batteries is forecast to increase nine to 10-fold over the next decade.
“That’s why it is important that we harness the opportunity to become a key player in battery manufacturing and export on the world stage.”
A mammoth package of policies and incentives for the local battery sector could be great news for the ASX stocks looking to build their businesses Down Under.
These are some of the listed small cap stocks taking Australia’s battery industry downstream.
There is 10 times more graphite than lithium in a lithium-ion battery, with each EV requiring ~55kg of flake graphite to make the battery anode.
It’s a complex process, one requiring years of testing and piloting to get right.
First, graphite ore is processed into a flake concentrate, which is then shaped in a process called ‘spheronisation’.
Then it is purified to 99.95 per cent.
At that point we have a potato shaped particle, sized to a certain diameter, which is +99.95 per cent graphitic carbon.
Here’s what a particle of purified spherical graphite (PSG) looks like:
Just joking, it’s tiny.
Then these particles must be coated. Once coated, spherical purified graphite is called ‘active anode material’.
Now it is ready for sale to a cell maker.
RNU says its vertically integrated Siviour Battery Anode Material (BAM) project in South Australia will be among the world’s lowest cost producers of this important value-added graphite product.
It recently completed a $70m placement to accelerate the expansion and development of the project, including bringing forward construction and operation of the upstream mine and concentrator portion.
A final investment decision is due this year.
EGR is building three standalone businesses – mining in Tanzania, downstream processing in WA, and recycling.
Its conditionally approved ~US$40 million loan under the Critical Minerals Facility will support the planned expansion of its Perth-based BAM facility to 20,000tpa.
First, it is focused on constructing and commissioning the initial 5,000tpa facility.
Meanwhile, newly listed International Graphite (ASX:IG6) wants to build an integrated mine and downstream graphite business in southern WA, with the ultimate goal to produce BAM for battery makers.
IG6 has already established a piloting facility (a smaller version of a commercial plant), for the downstream processing of graphite products.
A revised feasibility study for an expanded commercial scale graphite micronising operation is due to be completed in the March 2023 quarter, providing more impetus for a planned start to commercial operations by 2024.
Alternatives are coming to the fore as experts increasingly agree that there won’t be enough raw materials to supply lithium-ion batteries for both EVs and stationary storage applications.
AVL (ASX:AVL) is nearing development at its flagship Australian vanadium project in WA.
It is also eyeing downstream opportunities in the vanadium market – namely, vanadium electrolyte manufacturing and opportunities in the vanadium redox flow battery market through subsidiary VSUN Energy.
VRFBs are considered safer (they don’t catch fire), more scalable, and longer lasting than their lithium counterparts with a lifespan of more than 20 years.
VSUN is currently installing a battery system at the IGO (ASX:IGO) Nova nickel operation.
It has also been working to develop a 5kW/15kWh residential version of the VRFB for people who are looking for an alternative to lithium-ion batteries:
Then there are zinc-bromine flow batteries, as popularised by Queensland company Redflow (ASX:RFX).
RFX says these batteries are designed for tough Aussie conditions and are scalable from small systems through to grid-scale deployments.
The company’s sales pipeline has continued to grow over 2Q FY2023.
Several large potential projects have progressed in recent months in the US and Australia, as well as selected other specific opportunities in other markets.
“We are also working on several new exciting opportunities that have the potential to be material to Redflow,” it says.
“A number of those projects are multi-MWh in size.”
Here’s how a basket of ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, magnesium, manganese, and vanadium is performing>>>
Battery metals stocks missing from our list? Shoot a mail to [email protected].