LFP battery switch drives supply chain changes

Spanish Market: Metals
06/08/20

A shift back towards using lithium iron phosphate (LFP) chemistry in electric vehicle (EV) and energy storage batteries is prompting changes in production along the supply chain.

LFP was the initial cathode chemistry used in lithium-ion batteries for EVs in China. But consumer reluctance to buy vehicles requiring frequent recharging prompted manufacturers to switch to using higher-density lithium nickel-cobalt-manganese (NCM) chemistries that can travel further on a single charge.

The Chinese government has incentivised the production of EVs with longer driving ranges with its subsidies in recent years, accelerating the shift. This in turn prompted mining projects to shift from producing lithium carbonate, which is favoured for LFP cathode materials, to lithium hydroxide, which is used in NCM cathodes to help stabilise the nickel content.

But a push to reduce the amount of cobalt used in batteries and concerns over the safety of high nickel content has resulted in battery manufacturers, car makers, energy storage suppliers and mining companies taking another look at LFP. Concerns over spikes in the cost of cobalt and global reliance on supply from the Democratic Republic of the Congo (DRC) have driven battery makers to reduce the cobalt content in cathodes and instead use more nickel, but higher nickel content reduces thermal stability and raises the risk of explosion. LFP, while offering lower energy density, is more stable.

Lithium Australia is advancing the commercialisation of its patented LieNA extraction process to produce lithium phosphate directly from waste spodumene for use in LFP cathodes, reducing production costs and the number of conversion steps. Mining firms have been considering ways to shorten the process, as producing lithium chemicals typically requires the processing of brines to make lithium carbonate and then refining lithium carbonate into lithium hydroxide.

Spodumene producers have the advantage of being able to produce hydroxide without the intermediate step, and US-based Piedmont Lithium on 23 July said it has produced initial quantities of battery-quality hydroxide from spodumene concentrate using its ore-to-hydroxide conversion process.

But the production of lithium phosphate offers a "smaller mining footprint, greater sustainability, superior safety and an absence of conflict metals", Lithium Australia's managing director, Adrian Griffin, said recently. "There are good reasons why the Tesla Model 3 is going for LFP batteries in China […] and LieNA is aimed at servicing the fast-growing LFP battery market," he said.

US EV maker Tesla has opted to use LFP batteries from China's CATL in its cars produced in China. The vehicles' efficiency is sufficient for it to run on an LFP battery pack that will start volume production later this year, chief executive Elon Musk said in late July. This will free up NMC batteries for the company's planned electric semi-truck set for production next year, which Musk said requires the higher-energy density and longer driver range to transport cargoes.

Chinese EV manufacturer BYD and German carmaker Volkswagen are also using LFP batteries in vehicles to be sold in China. Volkswagen in May acquired a stake in Chinese battery supplier Gotion-High Tech, one of the country's largest suppliers of LFP batteries. Gotion has just begun construction of its eighth battery production plant, with a planned capacity of 10GWh, to be completed in late 2021.

China's Ministry of Industry and Information Technology (MIIT) lists 12 EV models that use LFP batteries, accounting for 24pc of 49 vehicles. In May, it issued new safety standards addressing thermal runway in batteries that has caused EV explosions. The regulations come into effect on 1 January 2021, a further encouragement to manufacturers to use LFP battery chemistry.

The increased adoption of the technology in China, the world's largest EV market, could spread to other regions. "LFP is experiencing renewed market enthusiasm because global leaders BYD, CATL and Tesla have announced high-energy-density LFP battery packs in vehicles that facilitate driving ranges of up to 600km," Dan Blondal, chief executive officer of Canadian battery materials producer Nano One, said recently. "These innovations could radically expand the global demand for LFP cathode materials beyond Asia and into North America, Europe and other markets."

The switch to LFP is also evident in the use of batteries for energy storage, which do not have the energy density demands of EVs. Canada-based Eguana this week launched an LFP-based residential battery storage system for North America that it will offer along with its NCM-based system. The company developed the LFP alternative in response to demand for a cobalt-free product, it said.

Lithium Australia's Soluna energy storage division uses LFP and NCM cathodes in its systems, of which it has made its first sales and installations, it said today. Germany-based Sonnen, which is owned by Shell, uses only LFP in its battery storage system, which it launched in its 12th country, Belgium, last month.

By Nicole Willing

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03/04/25

Mexico, Canada sidestep latest Trump tariffs: Update

Adds Canada reaction Mexico City, 3 April (Argus) — US president Donald Trump's sweeping tariff measures largely spared Mexico and Canada from additional penalties, as the US-Mexico-Canada free trade agreement (USMCA) will continue to exempt most commerce, including Mexico's energy exports. According to Trump's tariff announcement on Wednesday , all foreign imports into the US will be subject to a minimum 10pc tax starting on 5 April, with levels as high as 34pc for China and 20pc for the EU. Mexico and Canada are the US' closest trading partners and have seen tariffs imposed and then postponed several times this year, but remained mostly exempt from Trump's "reciprocal" tariffs. Energy and "certain minerals that are not available in the US" imported from all other countries also will be exempt from the tariffs. Trump also did not reimpose punitive tariffs on energy and other imports from Canada and Mexico. All products covered by the USMCA, which include energy commodities, are exempt as well. Yet steel and aluminum, cars, trucks and auto parts from Mexico and Canada remain subject to separate tariffs. Steel and aluminum imports are subject to 25pc, in effect since 12 March. The 25pc tariff on all imported cars and trucks will go into effect on Thursday, whereas a 25pc tax on auto parts will go into effect on 3 May. Mexico's president Claudia Sheinbaum this morning emphasized the "good relationship" and "mutual respect" between Mexico and the US, which she said was key to Trump's decision to prioritize the USMCA over potential further tariffs on Mexican imports. "So far, we have managed to reach a relatively more privileged position when it comes to these tariffs," Sheinbaum said. "Many of our industries are now exempt from tariffs. We aim to reach a better position regarding steel, aluminum and auto parts exports, too." The Mexican peso strengthened by 1.5pc against the US dollar in the wake of the tariff announcement, to Ps19.96/$1 by late morning on Thursday from Ps20.25/$1 on Wednesday. Mexico has not placed any tariffs on imports from the US, which may have eliminated the need for the US to reciprocate with tariffs. "In contrast to what will apply to 185 global economies, Mexico remains exempt from reciprocal tariffs," Mexico's economy minister Marcelo Ebrard said. Mexico exported 500,000 b/d of crude to the US last year, making the US by far the most important export market for the nation's commodity. Mexico also imports the majority of its motor fuels and LPG from the US. If US won't lead, Canada will: Carney To the north, Canada's prime minister says the US' latest trade actions will "rupture" the global economy. "The global economy is fundamentally different today than it was yesterday," said prime minister Mark Carney on Thursday while announcing retaliatory tariffs on auto imports from the US. Canada is matching the US with 25pc tariffs on all vehicles imported from the US that are not compliant with the USMCA, referred to as CUSMA in Canada. But unlike the US tariffs, which took effect Thursday, Canada's will not include auto parts. Automaker Stellantis has informed Unifor Local 444 that it is shutting down the Windsor Assembly Plant in Ontario for two weeks starting on 7 April, with the primary driver being Trump's tariffs. The closure will affect 3,600 workers. Trump on 2 April unveiled a chart of dozens of countries the US is targeting with new tariffs, but that lengthy list may also represent opportunity for Canada and Mexico, who have already been dealing with US trade action. "The world is waking up today to a reality that Canada has been living with for months," Canadian Chamber of Commerce president Candace Laing said, a reality which Carney views as an opportunity for his country. "Canada is ready to take a leadership role in building a coalition of like-minded countries who share our values," said Carney. "If the United States no longer wants to lead, Canada will." By Cas Biekmann and Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Stellantis idles plants, lays off 900 on US tariffs

03/04/25

Stellantis idles plants, lays off 900 on US tariffs

Sao Paulo, 3 April (Argus) — Stellantis is pausing production at two factories in Canada and Mexico and laying off 900 workers at US plants as the company evaluates the effect of US automotive import tariffs. Effective immediately, Stellantis will temporarily pause production at the Windsor Assembly Plant in Canada, resuming production in the week of 21 April, the company said Thursday. In Mexico, the Toluca Assembly Plant will halt production on 7 April through the end of the month. As a result, the company will temporarily lay off 900 workers at five US stamping, casting and transmission plants in Michigan and Indiana that supply assembly plants. The automaker attributed the decision to the "new automotive sector tariffs now going into effect". A 25pc tariff on all cars and trucks imported into the US took effect on Thursday and a 25pc tax on auto parts will go into effect on 3 May. Stellantis is monitoring the tariff situation to assess whether further action is required, North America chief operating officer Antonio Filosa said in an internal email shared with Argus . The moves affect production of Chrysler Pacifica minivans, Jeep's Compass and Wagoneer, and Dodge's new electric muscle car, the Charger Daytona. By Pedro Consoli Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trump tariffs some steel inputs, spares others

03/04/25

Trump tariffs some steel inputs, spares others

Pittsburgh, 3 April (Argus) — US president Donald Trump imposed a sweeping tariff regime Wednesday that will raise the cost of raw materials for steelmakers that operate electric arc furnaces. Pig iron from Brazil, direct reduced iron from Trinidad, and ferrous scrap from the UK will face 10pc tariffs. Ferrous scrap imports from the EU will face a 20pc levy. The tariffs begin April 5 and will not include shipments already in transit before that date. Two notable exceptions from the announced tariffs are scrap from Mexico and Canada. Canadian and Mexican scrap In February and March, Trump placed 25pc taxes on all imports from Mexico and Canada, before rescinding the tariffs days later in both instances. Many Canadian dealers paused US-bound shipments because of the uncertainty. The shifting trade policy partially caused US ferrous scrap imports from Canada to fall to 188,000 metric tonnes (t) in February, the lowest volume since May 2020 during the height of the pandemic, US customs data shows. Scrap dealers in Canada have begun to breathe a sigh of relief. The paused Canadian scrap shipments to the US will likely restart in April because Trump excluded the country from the latest tranche of tariffs, a Canadian dealer told Argus . Separate 25pc tariffs on Canadian steel, aluminum and automobiles are still in effect, however. The steel tariffs could temper flat-rolled steel mills' appetite for scrap this month because they rely on the US market for steel sales, the dealer noted. Brazilian pig iron and Trinidadian direct reduced iron Some US steel mills pivoted to the pig iron market in February and March because of the tariff uncertainty around Canadian and Mexican scrap. The move contributed to soaring US imports of pig iron in March. The US imported an estimated 535,000t of pig iron from all countries last month, more than double the total from the previous March, according to US vessel manifest data and US customs data. Vessel manifest data shows that the total included about 380,000t of pig iron last month from Brazil, the largest supplier to the US market. That could be the highest volume of Brazilian pig iron imported since January 2024 if the official US customs data confirms the sum. Trump's 10pc tariffs on imports from Brazil, Ukraine and other pig iron producing countries could drive up costs for US steelmakers, especially those with electric arc furnaces (EAF). The 10pc levy will also apply to Nucor's direct reduced iron (DRI) plant in Trinidad. Nucor, the US' largest EAF steelmaker, imports about 125,000t of DRI each month from its Trinidad plant. Nucor did not respond to a request for comment on the Trinidad tariffs. The tariffs on iron metallics announced Wednesday could cause steelmakers to raise their steel selling prices even more. US hot-rolled coil prices have already risen by 22pc since Trump announced the 25pc steel tariffs on 10 February. European and UK scrap EAF steelmakers in the US often look to Europe for prime scrap when US prices surge. That occurred in the first quarter of this year, when average #1 busheling prices rose by 25pc to $470/gross ton (gt) during that time. The US imported about 163,000t of busheling and shredded scrap in bulk cargoes from Europe last month, according to vessel manifest data . Not since June 2022 had the US imported more bulk ferrous scrap from Europe, US customs data showed. The new tariffs on UK and EU-origin scrap could make locally sourced scrap more attractive to US steelmakers. By James Marshall Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US services grow at slowest pace in 9 months: ISM

03/04/25

US services grow at slowest pace in 9 months: ISM

Houston, 3 April (Argus) — The US services sector expanded in March at the slowest pace since last June, with orders, export orders and employment sliding into contraction, as companies braced for tariffs threatened by the US administration. The headline purchasing managers' index (PMI) slowed to 50.8 in March from 53.5 the prior month, according to the Institute for Supply Management's (ISM) latest survey on activity in the biggest part of the economy. New orders slowed to 50.4 from 52.2, and employment fell to 46.2, showing contraction, from 53.9 the prior month. The breakeven threshold between growth and contraction is 50. New export orders fell to 45.8 in March from 52.1 the prior month. Imports rose to 52.6 from 49.6. The weakening services gauge follows ISM's manufacturing PMI, reported on 1 April, that showed factory activity fell to 49 in March, the first contraction in three months, which followed more than two years of contraction. The Federal Reserve Bank of Atlanta's GDPNOW tracker on Thursday forecast a 2.8pc annual contraction in US gross domestic product in the first quarter, which will be reported at the end of April. Services business activity/production grew to 55.9 last month from 54.4 the prior month. The price index fell to 60.9 from 62.6, showing slowing price growth. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US battery costs face sharp rise on tariffs

03/04/25

US battery costs face sharp rise on tariffs

London, 3 April (Argus) — Battery cells imported into the US market face a sharp cost increase following the imposition of US president Donald Trump's new tariff regime. The US last year imported $23.8bn worth of battery cells, according to trade data, mostly from China, Japan and South Korea, all of which have been hit with "reciprocal" tariffs after Trump's executive order was signed on 2 April. China, by far the largest supplier of battery cells to the US market, is now subject to an effective 54pc tariffs, with the extra 34pc duty on top of 20pc blanket duties introduced by the administration of former US president Joe Biden. Battery cell imports to the US from China last year amounted to $16.45bn, 70pc of the total, up from just $2bn in 2020. The new tariffs would add $8bn to this cost for US carmakers and battery pack producers. Japan and South Korea, long-standing US allies and partners in battery cell production, face tariff rates of 24pc and 25pc, respectively. The US last year imported $1.7bn worth of battery cells from Japan and $1.3bn from South Korea. Despite the tariffs, there is potential that Japan and South Korea could eat into China's share of US imports, because of the gulf between their respective tariff rates and being the world's only real alternative producers at this point. A longer-term outcome could be that the US domesticates some of this battery cell production, a trend that was already under way, thanks to Biden's Inflation Reduction Act, which allocated federal funding to battery giga-factories and other battery-related projects throughout the US. But building battery cells is not simple. The US will need access to raw materials, some of which are heavily affected by the new tariffs. Cell-making technology, controlled by the three Asian countries, could be included in any retaliatory measures. "The Trump administration's 'Liberation Day' announcement on tariffs are the biggest trade shock in history, representing a historic shift away from the long-term trend towards free trade," chief economist at investment bank Macquarie Ric Deverell said. "The tariff increase far exceeds earlier expectations, highlighting the strong 're-industrialisation' ideology of the Trump administration." Battery materials impact mixed The impact on key materials for the battery supply chain is mixed, with some metals and pre-cursor materials exempted from the new measures, while some key materials are included. Lithium carbonate, lithium hydroxide, cobalt sulphate, cobalt metal, manganese dioxide, natural graphite powder and flakes all are exempt from new additional tariffs. Key materials that are not exempt include nickel sulphate, manganese sulphate, phosphoric acid, iron phosphate and synthetic graphite, all of which will be included in the tariff regimes implemented on individual countries. The US has no nickel sulphate production and imports most of its material from Belgium and Australia, which exported 1,872t and 1,060t to the US last year, respectively. Tariffs on Belgium will fall under the EU, which will be applied at 20pc, while Australia is subject to a tariff of 10pc. Indonesia, the world's largest nickel producer, is subject to a tariff of 32pc, although so far it has not supplied material to the US. Total US imports of nickel sulphate last year reached 3,738t, up from just 1,125t in 2020. With regard to synthetic graphite, another essential item for battery cell production, the US imported 115,778t in 2024, up substantially from 30,109t in 2020. Most of this came from China, at 74pc of the import market. This material now will be subject to 54pc tariffs, significantly increasing this cost for US battery cell producers. By Thomas Kavanagh and Chris Welch US lithium-ion battery imports by country $bn Feedstock materials exempt from 2 Apr tariffs t US manufacturing investments by stage of supply chain $bn Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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