Yusuke: Hello. And welcome to another episode of Metal Mover Podcast, brought to you by Argus Media, a leading independent provider of energy and commodity price information. My name is Yusuke Maekawa, a senior reporter at Argus Media Japan. Today I'm joined by Antoine de Veyrac, a market research analyst at French mining company Eramet International based in Tokyo.
Eramet is widely known as a nickel producer. But it has recently started its new business in lithium production, and last year, the company has produced the first batch of lithium carbonate in Argentina. Lithium carbonate is essential to produce a lithium-ion battery, and Japan is ramping up the battery production for electric vehicles. But the country is struggling to raise the EV penetration rate, which is among the lowest in advanced economies.
So is Japan still a potential destination for the Eramet's lithium carbonate, and how do they think of the Japanese battery industry? Let's find it out with Antoine. Antoine, thank you for being with us.
Antoine: Thanks for having me.
Yusuke: Okay, let's start off with Eramet's new projects in lithium production. Can you tell us about the latest developments?
Antoine: Sure. So the production has just started in Centenario, Argentina, with the first quantities successfully delivered at the end of last year. Eramet is proud to be the first company to effectively implement the DLE technology, allowing us to produce lithium carbonate with much higher yield and much lower consumption of water resources in compliance with the highest CSR standards. As of now, the design capacity of Centenario's phase one is 24,000 tons of lithium carbonate per year. It's going to be battery-grade, which will gradually ramp up in the course of this year.
Yusuke: Okay. Can you elaborate a bit about your future potential projects in lithium production?
Antoine: Sure. So as for Centenario, the total drainable mineral resources amount to more than 15 million tons of lithium carbonate, with a very high concentration of lithium in the brine. This asset is large enough to support long-term growth and should reach production capacity to above 75,000 tons of lithium per year. Last year, on October 24, Eramet announced it had regained full ownership of the Centenario project, buying out the minority share of our partner. Apart from Argentina, we are also exploring options in Chile for future lithium development, where Eramet built some exploration and mining concession in the Atacama region back in 2023.
Yusuke: All right. So is Japan a potential market for the battery materials?
Antoine: Yeah. Obviously, Japan stands out as an attractive option we're looking at, mainly because of its established battery industry and its ability to produce cathode-active material, in which most of the lithium is consumed. While other applications for carbonate are also worth considering in the industrial field, the demand from batteries shows the most potential for us. And also, since Asia produces most of the materials needed for batteries, and Europe struggles to actually develop battery production capacity, partnering with Japan could be particularly a strategic for Eramet in the formation of a non-Chinese supply chain.
Yusuke: Okay. So how are you observing the Japanese battery industry overall?
Antoine: While Japan established itself as an early innovator in the field through hybrid vehicle development and a very long-standing battery manufacturing sector, I think it has recently lost substantial market share to competitors from China and Korea. The Japanese government recognizes the strategic importance of the battery industry in the global energy transition, and it has intervened recently with a strategy to maintain the country's competitive position in the international battery market, as it is now a matter of national interest.
By 2030, Japan is aiming of reaching 160 gigawatt-hours of battery domestic manufacturing production and 600 gigawatt-hours of global production capacity, as well as implementing solid-state batteries. As you mentioned, the domestic Japanese market as of today presents limited growth potential for EVs, where the current penetration rate stands around 3%, and the current battery capacity is around 20 gigawatt-hours. However, Japanese automakers have a significant presence in the international market, and they need to successfully transition to electric vehicle production to keep their foothold in those markets.
Obviously, the strategy primarily targets the American market, which is expected to become the world's third-largest EV market following China and Europe, as it is a region where the Japanese manufacturers have very strong business relationships. Despite their initial reluctance to embrace EVs, Japanese companies are now actually responding to the government initiatives within its strategy plan. As such, the industrial mobilization is expected to significantly increase the demand for battery materials over the medium to long term in Japan.
However, it remains subject to EV adoption in the country, obviously, where hybrid vehicles are still predominant. So some governmental backup and major technological breakthrough will be crucial to change the public opinion in the country and to accelerate the development of EVs, as heavy investments are being made to develop domestic battery production capacity.
Yusuke: Okay. So given that the Japanese battery market is expected to grow, what is your demand and supply prospect for each battery material? Let's start off with lithium.
Antoine: As for lithium, Japan is already the third-largest lithium-consuming country after China and Korea, as it is home to very large cathode-active material manufacturers. In 2024, the lithium demand should be around 50,000 tons, which was a year marked, as you know, by the stocking amid a slowdown in battery demand, which is still quite a big figure. So Japanese companies are mostly procuring lithium hydroxide since they use it for NCA and high LiNiCo chemistry. So hydroxide imports are growing rapidly, as CAM makers are ramping up production in response to higher demand for high nickel CAM from end users, notably battery makers abroad.
On the other hand, carbonate production consumption is currently low in Japan, where stock has accumulated due to expectation of a strong recovery in NMC LiNiCo chemistry following the COVID, which actually fell short of projections. The total CAM production in Japan is estimated at 175,000 tons in 2024 and is expected to grow to 350,000 tons. So to double by 2030, which will obviously drive the demand for lithium up. As calculated in the government strategy, the lithium need should double from the current 50,000 tons. And it should reach approximately 100,000 tons by 2030.
Yusuke: What about nickel?
Antoine: As for nickel. So the total nickel consumption in Japan is around 150,000 tons, with battery production being a major human driver. I mean battery-related nickel consumption fluctuates, obviously, based on market dynamics and inventory levels. But in Japan, it typically averages around 60,000 tons of nickel per year, which is pretty high. As the Japanese government outlined in its battery strategy, the growing domestic battery industry will require 90,000 tons of nickel in 2030, which is a 63% increase compared to the current estimated nickel demand in batteries in the country.
As you may know, current market conditions are tough, with lower-than-anticipated demand and high inventory. However, most nickel makers have in-house production revenue as they believe in the industry's long-term growth prospects. So mutual consumption should naturally increase. However, we should remember that it remains subject to the chemistry chosen by the nickel makers, depending on the market trend.
Yusuke: Okay. What about the manganese?
Antoine: Finally, manganese in Japan is primarily consuming the ferroalloys production for the steel industry, and batteries remain in this sector. However, manganese demand for batteries is expected to grow in the mid-to-long run, as manganese-rich battery chemistries are developed and gain popularity in the form of LMFP batteries.
Yusuke: Thank you, Antoine, a market research analyst at Eramet International. Thank you for joining us today.
Antoine: Thanks for having me.
