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cathode expansions surge as producers target 1 million tpa capacity","chinas-cathode-expansions-surge-as-producers-target-1-million-tpa-capacity","article/chinas-cathode-expansions-surge-as-producers-target-1-million-tpa-capacity",{"_uid":557,"date":558,"tags":559,"editor":565,"content":575,"excerpt":755,"featured":50,"reporter":756,"_editable":760,"component":761,"seo_title":553,"categories":762,"visibility":768,"author_company":49,"featured_image":769,"seo_description":755,"author_full_name":49,"author_job_title":49,"formattedDate":774,"formattedArticleDate":775},"0641fe2f-9a5a-4c12-9f51-2155c3409ba7","2021-08-26 00:00",[560,563],{"slug":561,"name":562},"china","China",{"slug":564,"name":521},"lfp",[566],{"slug":567,"name":568,"content":569},"didi-bostock","Didi Bostock",{"job_title":570,"image":571,"bio":573,"linkedin":574},"Editor - Energy Transition & Economics",{"filename":572},"https://a.storyblok.com/f/287943243085208/512x512/2c5ca5c1a3/didi-bostock.jpeg","Didi is the Energy Transition & Economics Editor at Benchmark, covering a broad range of markets across the energy transition. His remit spans from downstream sectors such as BESS and EVs, through to midstream such as new technologies and battery production, to upstream critical minerals mining. He also leads on financial analysis across these supply chains, alongside in-depth policy analysis.\n","https://www.linkedin.com/in/didi-bostock-656342198/",{"type":576,"content":577},"doc",[578,585,590,595,600,607,622,627,632,637,642,647,652,657,662,667,672,677,682,687,692,697,702,715,720,725,730,735,740,745,750],{"type":579,"attrs":580,"content":581},"paragraph",{"textAlign":49},[582],{"text":583,"type":584},"Following a series of major expansion announcements in 2021, China’s cathode industry has moved closer to having its first producer with a capacity of one million tonnes per annum (tpa).","text",{"type":579,"attrs":586,"content":587},{"textAlign":49},[588],{"text":589,"type":584},"With battery cell producers worldwide undertaking huge expansion plans and battery capacity in the pipeline for 2030 reaching 4,100.1 GWh in Benchmark’s August Lithium ion Battery Megafactory Assessment, the supply chain’s midstream is having to enact its own expansions to meet this growing demand.",{"type":579,"attrs":591,"content":592},{"textAlign":49},[593],{"text":594,"type":584},"Nowhere else is this more keenly felt than in China’s cathode industry, where incumbents and new developers alike have set out expansion plans with unprecedented scale.",{"type":579,"attrs":596,"content":597},{"textAlign":49},[598],{"text":599,"type":584},"The bulk of the large scale expansions in 2021 have been for LFP cathodes, with several producers now targeting the one million tonnes capacity mark, which would equate to over 425 GWh of lithium ion battery cell capacity.",{"type":601,"attrs":602,"content":604},"heading",{"level":603,"textAlign":49},4,[605],{"text":606,"type":584},"Ambitious new entrants, emboldened incumbents",{"type":579,"attrs":608,"content":609},{"textAlign":49},[610,612,620],{"text":611,"type":584},"The growing demand for LFP cathodes has driven one of the more interesting developments in the cathode market this year, which has seen ",{"text":613,"type":584,"marks":614},"titanium dioxide producers with no experience in the battery supply chain",[615],{"type":616,"attrs":617},"link",{"href":618,"uuid":49,"anchor":49,"target":49,"linktype":619},"https://source.benchmarkminerals.com/article/chinas-booming-lfp-market-draws-tio2-attentions","url",{"text":621,"type":584}," announce some of the largest LFP capacity construction plans to date.",{"type":579,"attrs":623,"content":624},{"textAlign":49},[625],{"text":626,"type":584},"China’s titanium dioxide producers typically use a sulphuric acid leaching process, which generates large volumes of sulphuric acid and ferrous sulphate. Both materials are costly to dispose of and have poor environmental records, however, they can also be used to produce iron phosphate, a key input material for LFP cathodes.",{"type":579,"attrs":628,"content":629},{"textAlign":49},[630],{"text":631,"type":584},"With demand for LFP materials increasing dramatically, and due to continue to grow considerably, titanium dioxide producers are willing to risk entering an unknown industry due to favourable economics.",{"type":579,"attrs":633,"content":634},{"textAlign":49},[635],{"text":636,"type":584},"In Q1 this year, CNNC Huayuan Titanium Dioxide Co (CNNC) announced its plans to invest RMB 12.1bn ($1.9bn) to construct a 500,000 tpa LFP cathode production facility in Baiyin, Gansu province, beginning with an initial 100,000 tpa of capacity.",{"type":579,"attrs":638,"content":639},{"textAlign":49},[640],{"text":641,"type":584},"This was followed by fellow titanium dioxide producer, Lomon Billions, announcing it would enter the LFP industry by teaming up with established LFP producer Hubei Wanrun to develop a 100,000 tpa LFP feedstock (iron phosphor) project.",{"type":579,"attrs":643,"content":644},{"textAlign":49},[645],{"text":646,"type":584},"The growth prospects of the LFP industry have also attracted players from across the cathode divide, with Huayou Cobalt — which has been focused on developing a vertically integrated NCM supply chain — eying its first moves into the LFP market in July.",{"type":579,"attrs":648,"content":649},{"textAlign":49},[650],{"text":651,"type":584},"Aware of growth prospects, and the scramble for market share, existing LFP producers have also announced major expansion plans and doubled down on existing capacity.",{"type":579,"attrs":653,"content":654},{"textAlign":49},[655],{"text":656,"type":584},"Dynanonic, which Benchmark’s Cathode Market Assessment forecasts will be the largest cathode producer in 2021, has announced major expansion plans this year. In Q1, Dynanonic set out its plans to increase production capacity to 220,000 tpa in 2022, increasing its capacity from 50,000 tpa last year.",{"type":579,"attrs":658,"content":659},{"textAlign":49},[660],{"text":661,"type":584},"In total, the company’s aggressive expansion plans have increased its cathode capacity pipeline to 370,000 tpa. But even Dynanonic’s capacity commitments, which would have been unprecedented until this year, have been overshadowed.",{"type":579,"attrs":663,"content":664},{"textAlign":49},[665],{"text":666,"type":584},"In July 2021, leading LFP producer Hunan Yuneng New Energy Battery Materials (Yuneng) a subsidiary of Xiangtan Electric, announced the cathode market’s largest investment to date when it promised to invest US$2 billion to develop 650,000 tpa of LFP cathode capacity and 650,000 tpa of LFP iron phosphor capacity at two sites in Yunnan and Guizhou provinces.",{"type":579,"attrs":668,"content":669},{"textAlign":49},[670],{"text":671,"type":584},"According to data from Benchmark’s Cathode Market Assessment this investment would increase Yuneng’s capacity to over 780,000 tpa, the largest capacity pipeline of any cathode company.",{"type":579,"attrs":673,"content":674},{"textAlign":49},[675],{"text":676,"type":584},"It is worth noting that although the company’s customers include leading cell producers BYD and CATL, Benchmark anticipates that the capacity is unlikely to come online in the medium term.",{"type":579,"attrs":678,"content":679},{"textAlign":49},[680],{"text":681,"type":584},"While major expansions such as Yuneng’s may not materialise in the near term, the plans afoot across the cathode industry show how producers are preparing for a new era of demand.",{"type":601,"attrs":683,"content":684},{"level":603,"textAlign":49},[685],{"text":686,"type":584},"What is driving China’s LFP cathode surge?",{"type":579,"attrs":688,"content":689},{"textAlign":49},[690],{"text":691,"type":584},"LFP’s resurgence, which came to prominence in early 2020, has seen several global announce plans to include LFP cells in their electric vehicle offerings. This has been followed by a further surge in LFP cell production in 2021, which saw installed LFP cells in electric vehicles in China overtake that of NCM for the first time this July.",{"type":579,"attrs":693,"content":694},{"textAlign":49},[695],{"text":696,"type":584},"While NCM and NCA chemistries are more prevalent in premium EV markets, LFP typically caters for the low-to-middle market EV offerings. However, with market leaders CATL and BYD demonstrating how energy density improvements can be achieved at a battery pack level using LFP cells, the LFP narrative has been strengthened.",{"type":579,"attrs":698,"content":699},{"textAlign":49},[700],{"text":701,"type":584},"There is also a regional aspect at play here. Demand for LFP cathodes is predominantly coming from China’s domestic cell producers, which tend to have shorter and lower qualification requirements than cells destined for western markets.",{"type":579,"attrs":703,"content":704},{"textAlign":49},[705,707,713],{"text":706,"type":584},"EVs are driving the major demand growth for LFP cathodes, but the technology’s use in other applications, particularly energy storage systems (ESS), is further boosting demand. This began to materialise last year with the massive ",{"text":708,"type":584,"marks":709},"buildout of China’s 5G infrastructure",[710],{"type":616,"attrs":711},{"href":712,"uuid":49,"anchor":49,"target":49,"linktype":619},"https://source.benchmarkminerals.com/article/5g-technology-to-expand-lithium-ions-battery-empire",{"text":714,"type":584},", which saw lithium ion energy storage systems installed at base stations across the country.",{"type":579,"attrs":716,"content":717},{"textAlign":49},[718],{"text":719,"type":584},"From the supply side, a key reason for the surge in LFP announcements is down to raw material availability. LFP players in China have relatively easy access to raw materials, such as iron phosphor, whereas NCM or NCA cathode makers face a more challenging raw material environment, with nickel and cobalt supply chains the most obvious.",{"type":579,"attrs":721,"content":722},{"textAlign":49},[723],{"text":724,"type":584},"But it iss worth noting that the narrative in China switches quickly. It was only three years ago that the market was signalling that the major developments would be for NCM 811, but today we see entire swathes of the industry focused on LFP chemistries. Regardless of chemistry, the scale of recent cathode expansions is unprecedented and demonstrates a new phase in the buildout of the electric vehicle supply chain.",{"type":601,"attrs":726,"content":727},{"level":603,"textAlign":49},[728],{"text":729,"type":584},"What next for China’s cathode industry?",{"type":579,"attrs":731,"content":732},{"textAlign":49},[733],{"text":734,"type":584},"This year there have been extraordinary expansions in the cathode market, particularly for LFP cathodes. This has seen the cathode capacity pipeline — existing, under construction and planned capacity — increase by 49% between December 2020 and July 2020 as shown by Benchmark’s Cathode Market Assessment.",{"type":579,"attrs":736,"content":737},{"textAlign":49},[738],{"text":739,"type":584},"For those producers that successfully deliver large scale capacity plans there will be significant cost production advantages. This is likely to lead to consolidation in the cathode sector as some small-to-medium producers become uncompetitive. This has already begun to play out in the battery industry with the rise of giga-scale facilities driving down costs for the largest producers and leading to consolidation of smaller battery companies unable to compete.",{"type":579,"attrs":741,"content":742},{"textAlign":49},[743],{"text":744,"type":584},"LFP expansions have been made on the back of improved market demand fundamentals but there are several near-term headwinds which could slow growth. The global semiconductor shortage is already beginning to affect LCO cathode demand, which is primarily destined for portables markets, and this is likely to extend to LFP cathodes if EV production is materially impacted.",{"type":579,"attrs":746,"content":747},{"textAlign":49},[748],{"text":749,"type":584},"Despite these potential headwinds, LFP cathode producers’ large scale capacity expansions are supported by the market’s growth prospects, with Benchmark’s Lithium ion Battery Database forecasting a 22.27% compound annual growth rate for LFP cell demand between 2021 and 2030.",{"type":579,"attrs":751,"content":752},{"textAlign":49},[753],{"text":754,"type":584},"While the expansion story has been focused on LFP this year, Benchmark’s Lithium ion Battery Database forecasts that EV demand for NCM cathodes demand will be five times greater than for LFP in 2030. With these growth prospects, the industry can expect even more unprecedented capacity expansions in other segments of the cathode supply chain.","Following a series of major expansion announcements in 2021, China’s cathode industry has moved closer to having its first producer with a capacity of one million tonnes per annum (tpa). With battery cell producers worldwide undertaking huge expansion plans and battery capacity in the pipeline for 2030 reaching 4,100.1 GWh in Benchmark’s August Lithium ion […]",[757],{"slug":567,"name":568,"content":758},{"job_title":570,"image":759,"bio":573,"linkedin":574},{"filename":572},"\u003C!--#storyblok#{\"name\": \"article\", \"space\": \"\", \"uid\": \"0641fe2f-9a5a-4c12-9f51-2155c3409ba7\", \"id\": \"\"}-->","article",[763,766],{"slug":764,"name":765},"batteries","Batteries",{"slug":767,"name":299},"cathode","private",{"id":49,"alt":770,"name":770,"focus":770,"title":770,"source":770,"filename":771,"copyright":770,"fieldtype":772,"meta_data":773,"is_external_url":51},"","https://a.storyblok.com/f/287943243085208/2bc3e3c83d/bm-byd-taxis-credit-nikada.jpg","asset",{"alt":770,"title":770,"source":770,"copyright":770},"Aug 26, 2021","26th August 2021",[],[],1792773933078]