Materials processing and cell component manufacturing

It’s not enough to tear ore from the ground and separate out the valuable materials. Battery components such as the cathode and the anode require highly pure ingredients – and that means lots of processing and refining.

This is highly specialized work. According to the International Energy Agency, Japan’s Sumitomo Group and several Chinese companies are among the dominant players in cathode materials. A single Chinese company, Jiangxi Tinci Central Advanced Materials Co. Ltd., produces more than one-third of the world’s electrolyte salt. Chinese companies also dominate the ingredients for anodes.

One of the most crucial materials is known as cathode active material, or CAM. This material, typically a powder, contains many of the battery metals mentioned above. In effect, it’s glued or laminated onto the battery’s cathode and stores energy. According to the IEA, 70 per cent of production capacity for cathodes is in China, with South Korea and Japan playing smaller roles.

North American CAM production is negligible. As long as that remains the case, Canada faces the risk that any battery metals it eventually extracts will be exported overseas for processing.

The Trillium Network urged that more refining and processing capacity be constructed near Canada’s mines. Brendan Sweeney, the network’s managing director, acknowledges that although such facilities employ hundreds rather than thousands of people, “they’re metal refining and chemical plants. They’re very capital-intensive, and very productive.”

But they’re also very difficult to establish. Burnaby, B.C.-based Nano One Materials Corp. has been working at that since 2011. It has patented a process for producing CAM, and established partnerships with an unnamed global automaker as well as metals and materials giants such as Sumitomo, Rio Tinto Group and BASF SE.

But Nano One hasn’t yet begun commercial production and continues to lose money. Its chief executive officer, Dan Blondal, said it costs three to four times more to build a CAM plant here than it does in China. To succeed in North America, producers must develop new battery chemistries and manufacturing processes that reduce complexity, energy use, waste and carbon emissions.

That’s what Nano One is attempting in Candiac, Que. Last year the company bought Johnson Matthey Battery Materials Ltd., a company that owned one of North America’s few CAM production facilities, for $16.3-million. There, Nano One is pilot-testing its process to produce CAM for lithium iron phosphate (LFP) cathodes – a chemistry that occupies a relatively small but rapidly growing segment of the EV battery market, in part because it doesn’t require nickel and cobalt.

“We feel that the cost structure we can set up here in Quebec can be competitive,” Mr. Blondal said.

Cell production and
battery assembly

The various components must be assembled into battery cells.

McKinsey & Co., the global management consulting company, says that cell manufacturing is the most important segment in the supply chain, and will account for as much as 40 per cent of all value created in the battery supply chain by the end of this decade.

There are at least half a dozen manufacturers worldwide that have a decade’s worth of experience making cells, according to McKinsey, and they’re mostly based in Asia. Canada is now seeking to join a new wave of battery makers that are setting up shop in North America and Europe. There’s room for 10 to 15, McKinsey has suggested, but many more than that are already jockeying for position. The inevitable result, McKinsey predicts, will be consolidation, so new entrants must be cost-competitive “from day one.”

That’s a tall order. In a report published this month by Accelerate (a coalition of Canadian manufacturers, parts suppliers, mining companies and others seeking to promote the establishment of EV battery supply chains), Marissa West, president and managing director of GM Canada, said building a battery plant here costs between three and four times as much as doing so in Asia – a reality that, in her view, highlights the need for government support.

An EV battery pack is a lot more than a single cell. It’s a system consisting of multiple cells, electronics, a cooling system, a battery management system and other components. Assembly is typically done in close proximity to cell production facilities.

By various estimates, the world will need at least 90 gigafactories to meet the growing demand for EVs by 2030 – perhaps as many as 400. A few years ago, a report published by the federal government declared that attracting a leading global battery manufacturer was a priority because it “would anchor Canada’s battery industry, supporting the growth of both upstream materials production and downstream development of electrified vehicle assembly and stationary storage technologies.”

Canada has now attracted three, at considerable expense.

The steady stream of announcements of new gigafactories throughout North America might seem impressive. But if the rapid pace of construction in China continues, that country will maintain its impressive lead over North American rivals.

According to a federal report, Canada imports 95 per cent of the batteries needed to meet its energy storage requirements. One consequence of the country’s late arrival is that it will be a struggle to establish a homegrown battery manufacturer.

“Most major North American EV battery plants are joint ventures with established multinationals, meaning companies from other countries are retaining the manufacturing know-how and intellectual property,” observed a report published jointly by Trillium and Clean Energy Canada last year.

Those multinationals include South Korea’s LG Chem Ltd. (which works with GM) and Japan’s Panasonic Holdings Corp. (which works with Tesla Inc.). First-mover advantage has allowed them to establish dominance.