Canada adds phosphate to critical minerals list as LFP demand grows outside China

Canada has added phosphorus, high-purity iron, and silicon metal to its critical minerals list, a decision that could support its bid to become a major ex-China battery materials supplier.

Lithium iron phosphate (LFP) battery cathodes contain both battery-suitable purified phosphoric acid (PPA), made using mined phosphorus feedstock, and high-purity iron.

“Phosphate was already considered a critical mineral in the provinces of Quebec and Ontario, which hold significant deposits,” said Benchmark analyst Rania Benjelloun Benkacem. “This national-level addition aims to draw awareness to upcoming market deficits for PPA.”

Silicon metal meanwhile is mainly used in chips and semiconductors but is also a feedstock for silicon-graphite battery anodes, which potentially offers greater density and extended vehicle range compared to standard graphite anodes.

“The timely addition of silicon to Canada’s critical mineral list may act to future proof its interests in the anode supply and value chains,” said Rory McNulty, senior research analyst at Benchmark.

Projects in these minerals will now be eligible for various forms of government support, including a seven-year C$1.5 billion ($1.1 billion) federal fund for new critical minerals infrastructure launched in November 2023.

The update is part of Canada’s Critical Minerals Strategy, launched in 2022, which partly aims to make the country a key supplier of ex-China energy transition minerals for geopolitical partners.

The US is a key target market for Canadian producers thanks to the Inflation Reduction Act (IRA), which awards consumer tax credits for EV using batteries containing critical minerals made in free trade partner nations like Canada.

Canada is also trying to achieve domestic critical minerals supply security, including for its growing battery industry.

“Canada’s addition of phosphates in its critical mineral list was in response to market fundamentals. It is a strategic step in recognizing the importance of this resource for Canada’s economy,” said Benjelloun Benkacem.

Rising battery demand for phosphorus

LFP’s iron and PPA inputs make for a cell chemistry with lower raw material costs than nickel cobalt aluminium (NCA) and nickel manganese cobalt (NCM), which contain the more price-volatile cobalt and nickel.

Despite its cost advantage, LFP’s EV market share remains low in the West, where battery capacity is dominated by NCA and NCM chemistries.

“In the West, the ESS market is driving the immediate need for LFP and its mineral inputs,” said Aran Waid, Benchmark analyst.

However, more Western EV manufacturers are expected to adopt LFP going forward as they target the affordable vehicle market. This is expected to drive up high-purity iron and phosphorus demand.

Right now, there are just three operating LFP cathode plants in the West, one of which is Nano One Materials’ site in Canada, according to Benchmark’s Cathode Forecast. A planned 10,000 tonne per annum capacity expansion at this site is due to go online in 2026.

North American and European LFP supply is expected to grow at a compound annual growth rate (CAGR) of 35% between 2024 and 2035, according to Benchmark’s Cathode Forecast, with seven pipeline projects now in place across the two regions.

PPA expansion key

The main raw material bottleneck for LFP expansion is expected to be in battery-suitable PPA, which is derived from mined phosphorus rock, with Benchmark predicting 0.8 million tonne deficit in the chemical worldwide by 2030.

Additionally, much of the 2030 PPA supply may not be geopolitically acceptable for the West since China is set to hold 73% of global capacity by that year, according to Benchmark’s Phosphoric Acid Market Outlook.

Securing mined phosphorus feedstock will be important, as well as increasing refining capacity to alleviate the chemical bottleneck. The element is mostly used as an agricultural fertiliser and demand from this sector is expected to grow even as rising battery demand puts additional pressure on supply.

Benchmark’s Phosphoric Acid Market Outlook service assesses phosphoric acid and P2O5 market balance for supply, demand and prices with a breakdown of pure phosphoric acid capacity in different regions out to 2030 on a quarterly basis.

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