This lithium battery market segment could grow 500% by 2030

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Lithium-ferro-phosphate (LFP) batteries that are not reliant on critical energy metals such as nickel and cobalt are forecast to grow by a massive 500 per cent by 2030.

While LFPs have been used in transport applications where safety trumps energy density, the use of more efficient cell geometry and modifications to the LFP chemistry – including the addition of manganese – have addressed its lower energy density compared to other lithium battery (LiB) chemistries.

Lithium Australia (ASX:LIT) managing director Adrian Griffin noted in an announcement that the use of LFP simplifies the supply chain by reducing exposure to critical metals such as nickel and cobalt.

Its popularity is already starting to show with global demand for LFP rising more than 25 per cent over the last 12 months, bringing Chinese LFP cathode powder production to over 100,000t per annum.

Additionally, while just two per cent of all LFP cathode powder production is located outside China, the growing demand for LFP batteries from electric vehicle (EV) manufacturers means there is a major opportunity to supply LFP into a market with little competition.

The stationary energy storage is also expected to drive LFP demand due to the transition to renewable energy and 5G communications.

This could create a market for nearly 90,000tpa of LFP cathode powder by 2030.

Consultancy Wood Mackenzie had predicted in August last year that LFP is expected to reach more than 30 per cent share of the energy storage systems market by 2030 while lithium-manganese-cobalt-oxide (NMC) is expected to decline from about 75 per cent to 30 per cent.
 

Nickel still in demand

That’s not to say that metals like nickel will fall out of favour with lithium battery makers any time soon.

A Fastmarkets survey has found that the transition to high nickel battery compositions has stalled due to concerns about cost and safety, meaning that for now at least, there is still substantial demand for cobalt.

In fact, 143 of the survey participants have positive expectations about cobalt demand in 2021 against just 24 negative responses.

However, there is little reason to doubt that nickel will play a bigger role once these concerns are addressed with Benchmark Mineral Intelligence telling Stockhead back in June last year that they would start to develop significant market share from 2023.
 

Advance Australia

European Lithium (ASX:EUR) has raised $7m through a placement to continue exploration and development of its Wolfsberg lithium project.

Meanwhile, Lithium Australia is keen to capitalise on the opportunity presented by the growth in LFP demand.

The company’s wholly-owned subsidiary VSPC develops and produces LFP-based cathode powders, plus derivatives that enhance the quality and performance to many other LFP cathode powders currently available.

VSPC will complete a preliminary feasibility study this quarter for LFP cathode production that includes emerging market dynamics and compares its production and use in a number of jurisdictions outside of China.

On the nickel front, Auroch Minerals (ASX:AOU) has started drilling at the previously producing Nepean nickel project that has targets across more than 10km of strike.

The targets have the potential to host significant massive nickel sulphide mineralisation.

Likewise, Azure Minerals (ASX:AZS) has also started drilling at its Andover nickel-copper project in the Pilbara.

The 30,000m two-phase diamond drilling program will seek to initially define the extent of the 1,050m long and +200m deep VC-07 mineralised body before infill drilling is carried out to produce a JORC resource.
 

Battery metal stocks

At Stockhead we tell it like it is. While Auroch and Azure are Stockhead advertisers, they did not sponsor this article.

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