IRA spurs Japanese, South Korean battery investment

Market: Battery materials
10/05/23

The US' Inflation Reduction Act (IRA) has stirred up the insecurities that economies have about their critical minerals industries, spurring greater electric vehicle (EV) battery investments in northeast Asia this year.

The battery race began in 2022 but intensified this year, with the IRA producing a greater response from governments and the global lithium, battery and EV industries. They now risk being left in the lurch as the US tries everything in its power to create a more independent and secure supply chain.

The past two months has seen UK's lithium industry respond, Europe's battery industry expressing concern, South Korea acting swiftly to support its EV and battery industry and Japanese politically-influential auto manufacturer Toyota taking the lead to advance the country's EV and battery industry.

Expanded tax credits under the IRA, designed to grow domestic production of clean energy vehicles and the lithium-ion battery supply chain, have, to a certain extent, resulted in expanded South Korean and Japanese investments.

There is now seeing increased developments across the entire critical minerals supply chain, partly because of the impact of the IRA and its ripple effects.

South Korean battery manufacturer LG Energy Solutions is aligning its supply chains to try making batteries that qualify for the IRA's subsidies. It has partnered up with Chinese lithium producer Yahua to produce lithium hydroxide in Morocco, which is a signatory to free trade agreements with the US and EU. It is also raising its investment in its Arizona's manufacturing complex to $5.5bn, planning a $4.1bn joint venture lithium-ion battery factory in Canada's Ontario with European auto producer Stellantis. It is also working with US auto manufacturer General Motors (GM) to operate three joint-venture manufacturing plants in Ohio, Tennessee and Michigan for GM's Ultium battery.

South Korean battery material firms SK On and Ecopro Materials' joint venture with Chinese battery firm Green Eco-Manufacture is also building a 50,000 t/yr battery precursor plant in South Korea to meet the IRA's market entrance requirements.

South Korea's government in general reacted positively to the revised IRA rules published on 31 March, according to a Congressional Research Service report published in April.

But Japan is standing firm on building out domestic capacity and seeking to regain market power. This is despite the critical minerals agreement signed between Japan and the US in March, essentially addressing Japan's concerns on the critical mineral content requirements of the IRA.

The unveiling of Toyota's new EV plan on 7 April denotes that the government will have no choice but to gear up domestic battery production to facilitate the private sector.

"Toyota means politics in this country," a battery material trader told Argus.

Uncertainty, tensions linger

But sluggish GDP growth in South Korea and Japan, coupled with high borrowing costs with expectations of persistently high interest rates, may limit firms' appetite to further invest.

GDP growth in Asia is to be dominated by China and India in 2023, according to the IMF's regional economic outlook for Asia and Pacific, which expects the two countries to contribute around half of global growth this year.

The relatively unstable global investment climate because of rising trade fragmentation risks may also be an obstacle to Japanese and South Korean firms' long-term domestic and foreign investment commitments. The two countries, which share production links with the US and China, may suffer negative spillover in their exports to the US and China if US-China trade barriers in the form of tariffs intensify, according to an economic update by the World Bank in April.

The intensifying side effects of friendshoring, or manufacturing and sourcing from countries that are geopolitical allies, and a greater divergence from globalisation of supply chains have become much more noticeable. This is creating tensions between economies given the looming insecurities.

Outside of Asia the policy has created political-economic challenges between the US and EU. It may even "create a wedge between EU member states that can subsidise and those that lack fiscal resources and cannot", according to a working paper by Washington-based think tank the Peterson Institute for International Economics.

By Joseph Ho

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14/05/25

Quotas most likely option for DRC cobalt export restart

London, 14 May (Argus) — The resumption of cobalt exports from the Democratic Republic of Congo (DRC) under a quota system appears almost inevitable, market participants said ahead of the Cobalt Institute's annual conference in Singapore this week. With cobalt prices rising and stocks tightening globally, market participants increasingly expect that the DRC's blanket cobalt export ban — implemented in late February — will transition into a more sustainable quota system. The current freeze has pushed up global cobalt prices, but also blocked the flow of royalties to the Congolese treasury, creating what several traders described as a politically deliberate but ultimately transitional phase. "This is not [Congolese trading and mining firm] Gecamines — it's Kinshasa, it's the ministry of mines, and ultimately it's the presidency," one trader said, emphasising the centralised nature of the decision-making this time around. The government's key grievance is financial, multiple sources agreed. Cobalt royalty revenues have collapsed in recent years, according to several market participants. "They've lost billions," said one source with direct links to the ministry of mines. "This only makes sense if they replace the ban with something dynamic that keeps prices up and restarts the royalty flow." Prices up, revenues frozen Prices for cobalt hydroxide have nearly doubled since February, from $6/lb cif China to close to $12/lb — a sharper jump than during than any previous bans on DRC exports, including the ban on Chinese producer CMOC's Tenke Fungerume mine in 2022, now the largest cobalt mine in the world ( see graph ). But with exports halted, the Congolese government has reaped none of the upside. "They got the prices up, sure — but right now, there's nothing coming in. No exports mean no royalties," one trader noted, "A quota is the only real way forward." Market participants expect any such quota regime to be modelled loosely on Opec, with the DRC restricting supplies in a co-ordinated way to support pricing. "The officials running this are oil and gas guys," one source who has met with the DRC delegation said. "They want Opec on steroids. They've said that outright." Others draw comparisons with Indonesia, which already operates a quota system for its nickel ore mining permits and mixed-hydroxide-precipitate (MHP), which contains cobalt. "Indonesian quotas are real, but they're built into nickel flows. It's not exactly apples to apples," a trader said. "So for Indonesia to reduce cobalt output, they'd have to reduce nickel output, which they don't want to do." Stockpiles thinning, squeeze ahead Record-high first-quarter cobalt hydroxide production by CMOC and global trafing and mining firm Glencore — at 30,000t and 9,500t, respectively — suggests a healthier supply picture than is really the case. "Production hasn't stopped, but that's the point — if exports don't resume, stocks will just build up inside the DRC or dry up abroad," a trader said. Some estimates place global cobalt hydroxide inventories at 50,000–70,000t, but availability depends heavily on who holds what. "20,000t with a larger producer is not the same as 20,000t with a small recycler," one trader said. "Some are more inclined to sit on it and wait for prices to jump." Multiple participants expect a squeeze to emerge in the international market by August, as final pre-ban shipments are consumed and no new material enters the pipeline. "One producer told people there'd be no more shipments after May/June," one source with direct knowledge of trading flows said. "That means by July, China is chewing through remaining stocks — and by August, you're in crunch territory." Some traders are already stockpiling, with exporters deliberately delaying cargoes to benefit from rising prices, market participants said. Strong enforcement The DRC's export restrictions are being heavily enforced. A customs brigade with military backing was deployed recently to Kasumbalesa on the DRC-Zambia border — the country's only significant cobalt export route — to prevent smuggling and enforce the ban. "People writing about illegal smuggling clearly haven't been to Katanga. There's one road. One crossing. It's tightly controlled," a trader told Argus . The new level of sophistication, some argue, is why a transition to quotas feels inevitable. "Extending the ban helps no one in the long term — not the DRC, not Chinese refiners, not the market," an industry consultant said. "A quota system is the only option that gives them both price and payment." Market sentiment remained mixed ahead of next week's conference, with cobalt spot trading thin, ranging from $15-16/lb in-warehouse Rotterdam for Chinese material, $17-18/lb for western standard grade and $19-20/lb for alloy grade. Whether the announcement comes in Singapore or in the weeks that follow, few now doubt the final outcome. "This [export ban] isn't a one-off," one participant said. "It's the start of a new model. The days of Congo flooding the market and watching others profit are over." By Chris Welch Cobalt prices post-DRC supply shocks pc Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Indonesian cobalt output capacity to double by 2027

14/05/25

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14/05/25

Indonesian cobalt output capacity to double by 2027

Singapore, 14 May (Argus) — Indonesian cobalt production capacity from its high-pressure acid leach (HPAL) operations will more than double to 114,000t in 2027 from 55,000t in 2024, National Economic Council member and executive secretary Septian Hario Seto has said. But there will probably not be significant capacity expansion beyond 2027, Seto told the Cobalt Congress 2025 conference on 14 May in Singapore. Xu Aidong, cobalt branch chief expert and adviser at the China Nonferrous Metals Industry Association, agreed that capacity will probably stick given slower-than-expected nickel consumption growth and rising costs for HPAL projects that include increasing sulphur prices used in hydrometallurgical production lines. Seto expects cobalt prices to trend up further if the Democratic Republic of Congo's (DRC) cobalt export ban continues but warned that the measure could backfire as it could prompt technology adaptation to lower the cobalt content in batteries. "I think we [saw] in 2017 and 2018 [that the battery sector] responded with massive adoption of the [nickel-cobalt-manganese] NCM 811, so you are compromising long-term demand of cobalt with this one," Seto said. Mixed hydroxide precipitate (MHP) production in Indonesia is still able to generate 30-40pc profit margins even with nickel prices around $15,000/t, Seto added, attributing that partly to the cobalt content. The country exported almost 1.56mn t of MHP last year, with cobalt exports up to around 44,350t. Indonesia previously separated the MHP before further processing into nickel sulphate and cobalt sulphate. "But nowadays, we directly ship the MHP and there is one factory in Indonesia that can process further the MHP going into the precursor without doing the crystallisation of the nickel sulphate," Seto said. "As long as we are increasing the MHP production in Indonesia, it's not possible to [be asked] to control this cobalt," Seto said, adding that the country does not see cobalt as an "independent mineral" but one closely intertwined with nickel. Indonesia's position on nickel is very similar to the DRC's position on cobalt, said Seto, where the biggest producer has to be "careful" and "responsible" in ensuring sufficient supply in the market or risk being treated as "not reliable". A DRC decision on whether to extend the export ban or impose a strict limitation of exports "in part" has yet to be made . The country's mineral markets regulator Arecoms said during the conference that it will communicate its decision as planned at the end of the cobalt export suspension period, at odds with Chinese market participants' expectations for the conference. By Joseph Ho Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Q&A: US' ACE Green bets on LFP batteries

09/05/25

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09/05/25

Q&A: US' ACE Green bets on LFP batteries

Singapore, 9 May (Argus) — US-based battery recycler ACE Green Recycling has been focusing on the US market, particularly its upcoming Texas recycling site, and plans to run its lead-acid and lithium-iron-phosphate (LFP) battery recycling operations alongside each other in Texas. Argus spoke with ACE Green Recycling's vice-president of investments and strategy, Aaron Wee, about their Texas site, battery recycling gate fees in Europe and the black mass market. The interview is split into two parts and part two's edited highlights follow: What's your view on the US market? The US market for lead is [one of] the most attractive market in the world. It's where you can find possibly some of the cheapest scrap batteries for lead, and also get some of the highest premiums on refined and alloyed lead. In terms of lithium, obviously the US is either the second- or the third-largest economy for [electric vehicles] and lithium batteries in general. Nowadays, with the improvements in LFP battery technology, the range and energy density problems of the past are now not really an issue. We sort of predicted the shift towards LFP quite some time ago. Back when the recyclers were concerned about nickel-manganese-cobalt (NMC) because we're going to get nickel, we're going to get cobalt. That was a relatively easy win for a lot of recyclers. But for us, LFP was always going to be the battery of the future. In fact, in our Texas project, we've already [begun the process of acquiring] the land and the facilities to combine both our battery recycling technology stacks and to co-locate them in a single location. But lead will start first because lead is going to make money tomorrow. LFP might take a little bit of time before feedstock actually comes in. What does ACE think of gate fees, especially in Europe? Does it distort the long-term consideration when setting up battery recycling operations? From a commercial point of view, I think depending on the battery type, that would be €500-800/t of batteries for gate fees in Europe. This may or may not hold over the next couple of years as more recycling capabilities are deployed in Europe. We won't say no to just getting money to recycle them. But our ultimate goal is not to rely on gate fees as a commercial strategy. Moving forward, I don't think any company can rely on gate fees as a strategy. It just won't be tenable. Eventually, somebody's going to be able to do it cheaper and better than you. And if you rely on gate fees, that's the end game right there. Gate fees are usually correlated with the price of lithium. [If] the price of lithium goes up, then recyclers won't [need to] rely on [gate fees]. Chances are we're going to be looking at maybe $12,000/t of lithium carbonate, [or] maybe $11,000 by the end of this year. What does ACE feel about the current pricing mechanism of black mass, battery scrap or even lithium? The correlation between lithium prices and black mass is very strong. But black mass as a commodity is a little bit trickier to export to China because of the regulations. Once they accept black mass [imports], especially LFP black mass, that will have a significant change. There will also perhaps be a fall in prices in the rest of the world because now they can sell to China, not just internally in their own domestic markets. Depending on how trade barriers may or may not come up over the next couple of months, we should see a shift in how black mass is priced. By Joseph Ho Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Australia’s election gives LNG, fuels sector certainty

05/05/25

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05/05/25

Australia’s election gives LNG, fuels sector certainty

Sydney, 5 May (Argus) — Australia's governing Labor party's second majority term could mean that changes to the offshore permitting regime promised last year are signed into law, while east coast LNG businesses will avoid a planned reservation system proposed by the opposition. Labor's victory at the 3 May election combined with the election of fewer members from the Greens party and climate-focused independents, could mean it faces less pressure to cancel fossil fuel projects. But it will remain reliant on the Greens to pass laws through the nation's upper house — the senate — meaning Labor may need to negotiate the passage of bills with the leftist party if the Liberal-National-based coalition opposes its measures. The Greens ran on a promise to ban new coal, oil and gas projects but won fewer seats than in 2022 because of preference flows. A federal decision on the lifetime extension of the Woodside Energy-operated 14.4mn t/yr North West Shelf (NWS) LNG delayed by Labor, is now looking more positive for the firm. The firm sees approval as vital to progressing its Browse gas development offshore northwestern Australia. Voters' rejection of the opposition Coalition on the nation's east coast means its policy to reserve a further 50-100PJ (1.34bn-2.68bn m³/yr) from the Gladstone-based LNG exporters will not proceed. The result provides an opportunity for certainty and stability for the energy sector, upstream lobby Australian Energy Producers said. The group urged the government to focus on new supply as Australia's gas reserves for domestic use rapidly deplete. The government will need to specify exactly how it aims to secure supplies to ensure stable supply, once coal-fired generators retire at the end of the 2020s and into the 2030s. This is because the nation's integrated system plan is based on Labor's policy of reaching 82pc renewable energy in the power grid, backed up by about 15GW of gas-fired power. Industry will await further direction stemming from the Future Gas Strategy which canvassed solutions to Australia's declining gas supply including new pipelines, storage and seasonal LNG imports. Permitting concerns In the government's previous three-year term, a series of court-ordered requirements to consult with affected Aboriginal groups briefly disrupted multi-billion dollar LNG developments. Labor promised to specify through new laws exactly which groups must be consulted before approvals could be granted. But these were dropped from the agenda in early 2024 following opposition by the Greens. Labor's resources minister Madeleine King blamed the Greens for obstructionist manoeuvres on this legislation, but it remains unclear if and when Labor might introduce such laws. Conversely, the Coalition promised to end government support for anti-gas lobbies such as law group the Environmental Defenders Office — set to continue under Labor. In liquid fuels, Labor's victory should boost Australia's electric vehicle (EV) sales, with emissions standards laws set to remain enforced. The Coalition had said it would soften the laws because of concern over cost of living pressures. Plans to temporarily cut the fuel excise will also not progress. Australia's EV take-up has stalled, and industry has blamed this on poor investment in recharging infrastructure and other policy settings, including the removal of the fringe benefits tax exemption for plug-in hybrid car models. A re-elected Labor government is likely to further policy towards a mandate for sustainable aviation fuel or renewable diesel, given the growing share of Australia's emissions projected to come from the transport industry. It pledged A$250mn ($162mn) for low-carbon liquid fuels development in March , for low-carbon liquid fuels development in March, as part of its commitment to the nascent sector. Local market participants are optimistic that further biofuels support will be provided as urgency to meet net zero ambitions builds, including a 2030 target of 43pc lower emissions based on 2005 levels. About A$6bn/yr of feedstocks like canola, tallow and used cooking oil are exported from Australia, while existing ethanol and biodiesel producers are running underutilised plants, making about 175mn litres/yr at present, because of poorly-enforced blending mandates. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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UK warned of looming battery shortfall as demand surges

02/05/25

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02/05/25

UK warned of looming battery shortfall as demand surges

London, 2 May (Argus) — The UK will face a 55GWh shortfall in battery supply by 2035 unless urgent action is taken to scale up domestic manufacturing and reduce reliance on imports, according to a new report from the UK Research and Innovation's (UKRI's) Faraday Battery Challenge. The report, commissioned by the Faraday Battery Challenge and delivered by Innovate UK, forecasts national battery demand to exceed 165 GWh/yr by 2035, rising to nearly 200GWh by 2040. More than 90pc of this demand is expected to come from the automotive sector, with additional pressure from aerospace, rail, marine and energy storage systems. The report identifies the UK's strategic need to establish gigafactories capable of producing high-performance and cost-optimised cells, including cheaper alternatives to nickel manganese cobalt batteries such as lithium iron phosphate and lithium manganese iron phosphate, which are dominated by Chinese producers. While the UK has excelled in battery research at centres such as the Faraday Institution, the report highlights critical gaps in manufacturing infrastructure and policy co-ordination. The Faraday team argues that building a resilient supply chain, from materials to modules, will require targeted industrial support and long-term investment. One source told Argus of the particular need for a battery manufacturing plan independent of a plan for battery electric vehicle (BEV) manufacturing, given the more rapid growth of the battery storage market worldwide. The world's largest battery maker, CATL, sold 381GWh of power batteries last year, up by 19pc on the year, while it sold 93GWh of energy storage batteries, up by 35pc on the year. For the UK to build out its own manufacturing capacity without government support, in the current climate, will be "challenging", Ed Porter of UK battery energy storage market data analysts Modo Energy told Argus . "That need not be a bad thing," he said. "The end goal is to decarbonise at speed." The UK is already planning two battery factories domestically. A 40GWh unit in Somerset is planned with Indian conglomerate Tata , while a 10GWh facility in the Midlands is in the works with China's Far East Battery . Both facilities will be operational by the end of this decade (see map) . The two plants are "being proposed to fill the need" for all electric vehicle (EV) batteries, said Aaron Wade, project director at global battery industry association Volta Foundation, "making another plant unlikely". The UK produced 276,000 EVs last year, including BEVs, plug-in hybrid EVs and hybrid EVs, according to data from industry body SMMT, meaning a large number of its 381,000 BEV sales last year were not domestically produced. And it is a trend that may continue. "It makes most sense for battery plants to be located on the continent, with easier transport and proximity to car factories," Wade said. Battery demand is forecast to climb in other sectors too, such as aerospace and off-highway vehicles, particularly if energy density and charging performances improve. But many manufacturers, particularly those in niche markets, will need aggregation or modular cell solutions to justify investment, by either pooling funds with other end-users or using cells fit for several applications. The UKRI's report comes as major markets China , the US and the EU accelerate efforts to secure battery supply chains, often backed by state support. Industry leaders warn that without a similar ambition, the UK could find itself marginalised in the race to electrification. By Chris Welch Europe gigafactory forecast (Sep '24) GWh Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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