For the past few years, the ambition of electrifying transportation and energy storage while reducing emissions to net-zero has focused on securing the critical raw materials like lithium, cobalt, nickel, copper and aluminium that are necessary to achieve these goals.
But governments, original equipment manufacturers (OEMs), battery makers and the metals and mining industry have been overlooking one key mineral: phosphate.
It’s the ‘p’ in the lithium-iron-phosphate (LFP) batteries that make up almost half the world’s batteries for electric vehicles (EVs). It’s also the key ingredient in the fertilizer and animal feed used to produce the food and livestock that the world’s ever-growing population requires to live.
The push-pull between the two consumption groups is set to become increasingly strong as the drive to meet targets for EV consumption step up. But the type of phosphate available, and the quantities in which it is required, mean that a pinch-point in the system is looming.
That’s because around 90% of current phosphate production is used for fertilizers, of which almost all goes through a purification cycle to get to the Merchant Grade Acid (MGA) that is suitable for fertilizer and animal feed. Yet only about 10% of sedimentary feedstock can be purified to produce purified phosphoric acid (PPA) used in batteries for EVs.
There’s no shortage of phosphate rock – it’s just the wrong kind of rock.
Reserves of sedimentary rock are plentiful, in Mexico, Morocco, Algeria, China and Jordan.
But what battery manufacturers need is igneous feedstock, of which 90% can be scaled up to produce PPA. Only around 5% of the world’s phosphate is found in this igneous form; the rest is in sedimentary rock. What is more, only the purest 1% of that 5% is igneous anorthosite, devoid of heavy metals and low in sulphur content, and therefore capable of producing large amounts of LFP battery-grade PPA.
So where to find this elusive mineral? Igneous rock is present in Russia, which is off the table for many nations amid the war in Ukraine, as well as in South Africa, Brazil, Finland and Canada.
There are some projects in progress, but not enough to meet the forecast 35%+ increase in demand for PPA in LFP batteries in EVs that analysts forecast will be required by 2030.
First Phosphate
One company, First Phosphate, has locked up the available deposits in the Saguenay-Lac-St-Jean area of Quebec, Canada that hold the rare phosphate-bearing igneous anorthosite rock, anticipating a rush to secure access, its chief executive officer John Passalacqua said.
“The majority of the world’s existing phosphate deposits are used for the fertilizer industry, but you can’t strip away the phosphate used to feed people in order to make a car instead. New mines are required, and ones that respond to the needs of the technology industry, which is much different than fertilizer,” he told Fastmarkets.
“Existing sedimentary mines cannot economically produce the quantities of PPA to the environmental, social and governance (ESG) level required for the battery industry; it would be very expensive to purify it, if not impossible in some cases,” he added.
The plan, he says, is to vertically integrate the upstream process in North America at every stage, starting from extraction at mine to concentration, refinement to phosphoric acid, and then to produce LFP cathode active material.
The Vancouver, Canada-based company’s strategy comes as the US Inflation Reduction Act (IRA) works to drive local mining and manufacturing and create more integrated supply chains for EVs.
There’s a long way to go. Phosphate isn’t even on the critical minerals list for the United States or Canada, something that will have to change if North America is to meet the ambitious goals of the IRA.
Phosphate has made it onto the European Commission’s critical minerals list, however, and is on a watchlist of minerals that are deemed to be increasing in criticality in the United Kingdom.
Expanding chemistries
Currently, around 80% of LFP batteries are made in China, while nickel-cobalt-manganese (NCM) chemistries rule the roost in Europe and the US with around 70% of market share.
But companies like Tesla, Volkswagen and Mercedes-Benz are all working to add more LFP batteries to their product mix, heating up demand for the PPA required.
Ford has meanwhile partnered up with CATL, leveraging the Chinese battery producer’s expertise to manufacture LFP cells in the US.
Projects are underway at a government and battery manufacturing level too.
The US government has awarded chemical company ICL-IP America a grant to develop an LFP cathode facility in the country, while Norway-based FREYR Battery has announced the development of a $1.7 billion EV battery gigafactory in the US state of Georgia.
Canada-based lithium-ion battery technology company Nano One has also recently acquired a former Johnson Matthey LFP production facility in Quebec which it plans to scale up.
Yet reliance on overseas nations like China for the critical minerals in battery cells will continue for some time, a situation auto OEMs are well-aware of. After all, it’s one thing setting up large gigafactories to produce LFP batteries but quite another finding the phosphate required to feed these plants at anything outside lab-testing scale.
A recognition of the supply constraints is starting to set in as a result and is being reflected in world phosphate rock prices, which the World Bank estimates to have risen from $173.13 per tonne in January 2022 to $300 per tonne in January this year.
As First Phosphate’s Passalacqua put it: “The largest limitation on LFP batteries will be the supply of PPA, and that’s really problematic for supply chain independence and for the IRA guidelines.”
In Hotter Commodities, special correspondent Andrea Hotter covers some of the biggest stories impacting the natural resources sector. Sign up today to receive Andrea’s content as it is published.
