LiFeP battery materials is something MNB is looking at getting into with its cornerstone investor but even if nothing eventuates from that, the growth in demand for phosphate from use in batteries might affect the price of phosphate and that will increase the TSP price and the price that MNB will receive for its beneficiated phosphate fertiliser. So while any project between MNB and its cornerstone investor into LFP materials might take backstage to the phosphate and green ammonia projects, one way or the other, growth in LFP batteries matters for MNB through the effect on the phosphate price.
What a difference in growth forecasts a year or two can make. This was one forecast made in August 2021. "Lithium-iron Phosphate Batteries Market Outlook - 2030The global lithium-iron phosphate batteries market size was valued at $5.6 billion in 2020, and lithium-iron phosphate batteries market forecast to reach $9.9 billion by 2030 at a CAGR of 5.9% from 2021 to 2030."
This was a forecast made in Sept 2022. "Lithium Iron Phosphate Batteries Market Size to Hit USD 49.96 Billion by 2028 | Exhibit a CAGR of 25.6%"
That's a huge jump in expected market size of LFP batteries, from $9.9 billion by 2030, to $49.9 billion by 2028 - two years earlier. It's also a huge increase in expected growth rates from a significant 5.9% to a very large 25.6%. At 25.6% per year, the market doubles every three years. That forecast market size by 2030 doesn't even come close to the expected demand by then so that leaves room for upside if the manufacturers can keep up with demand (see chart below). One big reason for the big growth forecast from here is that the market outside of China is expected to grow very rapidly with the expiry of patents that substantially held back production and sales of LFP outside of China (see article linked below for details). Who knows how the extra demand will affect the phosphate price going forward but it seems likely to me that the base case (15 year average price) really will be a base case and future prices are likely to be higher than that, making the base case After tax NPF of A$300mill look increasingly conservative.
The article linked below gives a good comprehensive background on LFP batteries, their rapid growth in China and their now likely rapid growth outside of China. While other battery technologies will remain and new ones will no doubt come along, e.g. LiS, it looks very likely that LFP will take a rapidly increasing share for years to come.
It's long but well worth reading I think. A few snippets;
LFP was invented and developed in North America, but Chinese companies were the first to place a big bet on the technology, according to Karim Zaghib, a battery scientist at Concordia University who worked for Hydro-Québec in the 1990s.
After successfully installing LFP batteries on buses ahead of the 2008 Beijing Olympics, China, impressed by the chemistry’s improved fire safety compared with nickel-based batteries, made LFP production a national project, Zaghib says. “The Chinese government and Chinese companies invested a lot in LFP.”
And the material has been a hit. In 2021, more than 40% of electric vehicles sold in China had LFP in their batteries, according to the market research firm Adamas Intelligence.
Between 2010 and 2016, China’s capacity to make LFP cells, or individual battery units, increased 100-fold, according to Cormac O’Laoire, managing director of the Hong Kong–based battery consulting firm Electrios Energy. By 2021, he says, Chinese companies were producing over 90% of the world’s LFP powder.
Suki Zhang, Dynanonic’s account manager for overseas markets, says most of its growth has come in the past 2 years, a period when Chinese battery manufacturers, such as Contemporary Amperex Technology Co. Limited (CATL), were investing heavily in LFP. “We have so many batteries here,” she says. “The demand is a big reason why we built LFP in China.”Chinese factories are able to make LFP cheaply, in part because the consortium of organizations that owned the relevant patents—including France’s National Center for Scientific Research, Hydro-Québec, Johnson Matthey, and the University of Montreal—agreed not to charge Chinese companies licensing fees if they sold only in China, according to an International Energy Agency report. In contrast, the Taiwan-based LFP maker Aleees says it paid about 10% of its sales in licensing fees until recently. The intellectual property was held more closely in other parts of the world. “That may have limited some of the development of LFP in the US and Europe,” says Anantha Desikan, ICL’s chief technology officer.
Over the past few years, the core patents behind LFP manufacturing have expired, removing a barrier for non-Chinese companies interested in producing LFP. O’Laoire says the expirations also make it easier for Chinese companies to serve markets where the patents were previously enforced.Zhang says Dynanonic is now considering an overseas expansion, though the company hasn’t yet disclosed a specific location. Any such project would depend on the strength of battery manufacturing in other countries as well as on the rules for implementing clean energy policies like the Inflation Reduction Act, the landmark US legislation that is projected to inject $142 billion into companies making batteries or battery components in the US.Other Chinese battery companies have already started expanding overseas. Gotion High-Tech, which has been producing LFP batteries and cathode materials in China since 2007, plans to build 100 GW h of battery cell capacity outside China over the next 3 years. In June 2022, Gotion, whose biggest shareholder is Volkswagen, announced plans for its first LFP battery factory in Europe. A few months later, an economic development agency in Michigan awarded Gotion’s US subsidiary grants and tax incentives to help construct a $2.4 billion plant in Big Rapids, Michigan. If built as planned, the factory will produce 150,000 t of LFP cathode material per year.
