Subs exclusive: Why localised battery production will be key for EVs

Nico, how is Urbix different from other suppliers in the field?

NC: "We're a CSPG [coated spherical purified graphite]. So we’re an active graphite producer that has developed a mechanism for processing graphite that uses 90% less energy than the conventional alternative. We don't use the hydrofluoric or hydrochloric acid approach and are based in a light industrial zone at the moment in Mesa, Arizona.

"Our goal is to be able to address not only the capacity challenges [around graphite supplies for battery production], without utilising any Chinese key capital equipment, or Chinese raw material. But at the same time, we want to be able to address the ESG compliance approach because we believe there's no point in having an energy transition if the materials that you put in your battery are made from fossil fuels or create loads of CO2."

How difficult is it to build a battery supply chain?

IS: "Nobody walks into this thinking it's going to be an easy task: China has very much taken the lead in this field. The government in China saw the opportunity. They invested very, very heavily 10 to 15 years ago and built up their capability. And a number of us, myself included, spent a lot of time in China helping the automotive industry gear up for electric vehicle production.

"This isn't all just about manufacturing capacity and trying to get that as low carbon as possible. It's about the mid-stream supply chains and where those conversion processes take place. Nico, on the graphite side, talked about reducing the amount of energy that's required to convert those materials. Hence, you're reducing the carbon content of those materials.

"Quite often, we see that you can't just transplant some of the processes that are used in China, or anywhere else in Asia, and just put them in Europe because our environmental regulations are far too tough for that. So quite often, it's not just about standing the supply chain up: it's about being innovative, and making sure that we've got new processes and low-carbon ways of delivering those materials into the back end of a battery cell manufacturing facility."

SS: "The important factor that Isabel just talked about there is the supply chain, and further down the supply chain, if you think about the materials that we actually need to use.

"Just look at what's happened with nickel recently in the marketplace as an example. And you look at the availability of things like cobalt, mostly provided from the DRC. We also have a responsibility in this space, not just on the carbon footprint, but also human rights, and working conditions. So we don't want to move from one issue to another – making it really important that we actually work with the supply chain.

"So looking at what we do from a social responsibility point of view is really, really crucial, not just to us, but to our customers. And as we move forward, I think it's really important that we keep that at the forefront. We don't want to create a carbon-free environment, only to have lots of human rights issues. Nobody wants that.

"The risk is the other thing that we need to consider here. You've got human rights and working conditions risk, but you've also got investment risk, because technology is changing rapidly and is sometimes driven by the lack of raw materials that are available.

"Capacity and competence coming into Europe is getting better, I think, but what we're finding is the investment is huge, and the risk is high. So quite often we’re finding that the people we’re working with are asking for support – and for us to go in. So you've seen we've already done one joint venture in Europe and I'm sure there will be more as we go forward, to reduce that risk and also to ensure that demand is going to be there."

NC: "I do want to mention one thing. We are a tree-hugging company in the sense that we do believe in ESG compliance, so we do hug trees while we're making our material.

"But we're also pretty pragmatic and understanding of the massive OEMs like Ford. They do need capacity before they can start worrying too much about ESG. Maybe that sometimes doesn't sit very well in certain forums, but that's the reality.

"If you're sitting there, and you need to meet targets, you can’t be waiting around for Urbix to be up and running in 2024 or 2025, if you’re Ford, and so you do need to tap into the China supply chain. We also need to be understanding and pragmatic that the goal is capacity first and, while doing it, have a strategy that has, in parallel, any ESG components so that when 2025 comes around, we begin to see the fruits of this strategy that people like Isobel and Sue are implementing."

Are there enough raw materials?

NC: "Let's also understand how all this happened. Obviously you can argue all day long about the oil-loving US but we've also had, in the US, a long-term view of at most eight years, because that's how parties typically shift at the White House. The Chinese actually had a true long-term vision of things.

"To your point, we believe that, geologically speaking, graphite is abundant. But then once you actually start zooming into the jurisdictions where these potential deposits are, you need to start considering those requisites for mining, the loss of mining etc, etc. The US is not as mining friendly as Canada. So when you see an announcement of graphite in the US that there is going to be a mine, it's likely it will take about 12 to 18 years [to come online].

"So we need to be cognisant of the fact that allies have become a big thing for us. A lot of the allied nations in the Americas - for instance, Brazil - do have a vast capacity to supply the US.

"So we need to consider those and then set up a strategy where we actually have the processing capacity, which is where the true bottleneck is, controlled in a local manner. Then that processing is subject to the laws of the local jurisdiction, which tend to be more environmentally conscious in North America and Europe."

IS: "Technology is playing a really, really important part in this. There are restrictions on some materials - cobalt we're getting from the DRC. Of course, the smart thing would be to move away from cobalt if we can, or to reduce the amount of cobalt we have in batteries. Obviously, iron phosphate and some of the advanced phosphates don't contain cobalt or are cobalt free.

"That's the real focus for us as a business, to make sure that we have those options on the table for our customers.

"It doesn't matter how much we wish to find nickel in the middle of France or Britain: it's locked to geology at the end of the day, so you find that material where you find it.

"Quite often there are plenty of reserves. But it's the capacity to mine, refine and convert it, and that mid-stream is really, really important. The investment in standing up that capability is really important. There is a lot of work going on behind the scenes to resolve that by the middle of the 2020s and beyond.

"So we're hopeful that this multi-stream approach [will work] - changing the technology to make sure that we maximise the materials as efficiently as possible and making sure that we can produce them in a low-carbon way. But getting that localisation piece, meaning Europe and North America, is our entire focus."

How far are we behind China?

IS: "Don't forget that one of the principal researchers who created lithium ion batteries in the first place was based here in Oxford in the UK. As a country, we've got a long history in developing battery technology. So the knowledge and capability and skills gap is less than people think it is because we've been involved with it for a very, very long time.

"It's simply a factor of time and money to put those plans into place. So we know how to build. We know how to scale. We know how to industrialise. It's just a question of getting it into the ground as quickly as we can, and making sure that you've got the right teams and the right people and the right funding plans to be able to execute on that. I mean, I'm oversimplifying it by a massive degree, but it's not as if this is entirely new to the West. We can do these things."

SS: "The other thing that's important here is we are also ahead of the game in terms of the end energy sources. When you look at that energy, it is really the crucial thing about EVs: there's no point in having an EV if it's fuelled or the energy to make the batteries is coming from fossil fuel. What we really want to do is make sure that we're focused on the energy sources and that's where our governments can really, really drive the point home."

How important is local production to Ford?

SS: "It's going to be really important. Legislation is driving some of that but also, as I said earlier, the point of EVs is actually to try and bring your carbon footprint down and so you really want to be as local as you possibly can.

"Imagine shipping some of these cells around the world. That's just not the right thing to be doing, either. It’s really important for us to be looking at localising production as much as we possibly can.

"Some of the trade barriers that are coming in will force us down that path as well. And many of the suppliers we're working with know that and they're working on their plans.

"So I think it's going to be really important to all OEMs to be doing more and more locally, both for Europe and North America. Pretty much everywhere around the world is closing in. We’ve also seen a lot of issues with trade barriers coming up as well.