Japan and China aim for leadership in global battery separator business

Who will redeem High Purity Alumina, HPA, from its boring image? Australian stock market platform * recently got off to a good start, calling the high purity ceramic a "hallelujah material" for batteries and battery separators in particular. Coating battery separators with HPA nano-particles could become the killer application. Specialized HPA companies such as FYI Resources (ASX: FYI; FRA: SDL), Alpha HPA (ASX: A4N) and Altech Chemicals (ASX: ATC) are known to be betting on this. However, the growing demand for Li-ion batteries and energy storage will require the production of battery separators in a completely new dimension. To be ready for this future, Japanese chemical manufacturer Asahi Kasei and Chinese global separator leader Shanghai Energy New Materials Technology are now set to join forces in a new partnership.

The deal allows for deep insights into the battery industry. The two companies have just announced a joint venture and plan to build a factory in the southeastern province of Jiangxi as early as next year. That's according to Japanese media platform Nikkai Asia, following a briefing by Asahi Kasei President Hideki Kobori last Friday. The Chinese partner will take a 51% stake.

One factory: annual separators as large as 46 times the area of Frankfurt airport

The dimensions of the planned production are interesting. They give an amazing impression of the challenge facing the battery industry. The new factory is to produce low-cost separators for large storage systems starting in the first half of 2022. The plan is to increase annual capacity from an initial 100 million square meters to 1 billion square meters by 2028. So starting with an area 4.6 times the size of Frankfurt Airport, the goal is to expand annual separator production to 46 times the area of Frankfurt Airport in five years.

Japan's Yano Research Institute estimates that global sales of separators will increase from 4 billion square meters in 2020 - the area of Majorca - to 6.1 billion square meters in 2026. The market is driven by demand from the electric vehicle and electronic equipment industries. Increasing use of solar and wind energy is expected to drive further expansion of the separators market.

Separators separate the anode and cathode in a battery, but at the same time must be permeable to the lithium electrolyte. As batteries become more powerful, the plastic separators are subjected to greater heat stress. To make the batteries safer, separators are therefore increasingly being coated with HPA. In the industry, this is referred to as "HPA coated separators."

Shanghai Energy has strengths in cost-conscious production and local marketing, while Asahi Kasei will provide manufacturing technology to its U.S. subsidiary Celgard, a specialist in separators for storage systems. The agreement will enable the Japanese company to identify new trends in China, the world's largest market, at an early stage and to use this knowledge for product development.

Summary: We had recently reported on LG Chem's $500 million acquisition in the separators business. The recent decision by Japanese technology leader Ashai Kasai to join forces with the world leader in separators from China speaks to the tremendous momentum that exists in this business. The rapid pace at which this industry is developing, and the tremendous opportunities for high-purity alumina - HPA - that it presents, are sure to be closely noted by Alcoa Ltd. as well. By early October, Alcoa and FYI Resources plan to announce a final decision on a possible joint venture. Given the enormity of the separator business, this is arguably nothing less than the start of a new industry. Is Alcoa ready for it? We'll know more in two weeks.

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