Inflation Reduction Act has derisked battery supply chain, says Albemarle’s president of energy storage, Eric Norris | Hotter Commodities

From insights into how the battery raw materials supply chain is changing to Albemarle's bullish view of lithium demand growth, Andrea Hotter speaks at length with Eric Norris about his life, career and where Albemarle is headed next

The Inflation Reduction Act (IRA) has de-risked the battery supply chain, catalyzed investment into the United States and provided a key differentiator to Europe, the president of Albemarle’s energy storage global business unit said.

According to Eric Norris, who has run Albemarle’s energy storage division since 2018, the challenge of the battery supply chain is that, despite there being multiple steps from mine to market, the first thing to evolve in any country or region is the automobile and associated battery plant. This has traditionally left a supply gap in mid-stream processing that has been filled by plants in China, Japan and South Korea.

“Several years ago, we were often being asked whether we would supply more lithium into the US, but at the time, there was little economic rationale to build a lithium plant here when all the demand was in Asia. What the IRA created was an incentive to build a supply chain here [in the US], generating local demand for lithium and derisking that problem,” he told Fastmarkets in a recent interview.

“Now we know that there’s a sufficient incentive for a supply chain to be built domestically, we can with comfort proceed at the beginning of the supply chain, knowing that, by the time a lithium plant is finished, there will be demand here on the ground,” he said.

Albemarle – headquartered in Charlotte, in the US state of North Carolina – has a history dating to 1887. A global producer of catalyst solutions and performance chemicals, Albemarle is one of the largest lithium producers in the world, with more than 7,000 employees globally and customers in 100 different countries.

It became a lithium behemoth when it acquired industry peer Rockwood Holdings in 2015, and it operates in countries including the US, Chile, Australia, China and Germany.

The company is working to bring its Kings Mountain spodumene ore deposit back online. The site of the former mine, shuttered in 1988, is part of the Carolina Tin-Spodumene Belt within the Inner Piedmont terrane. Albemarle estimates that the new mine could have an operating life of potentially 20-30 years.

“We were already planning to develop the Kings Mountain mine, not because it was in North America, but because it’s a top-quartile resource, and we needed it to keep up with growth in demand no matter where that consumption was,” Norris noted.

The company has also expanded Silver Peak, in the US state of Nevada. It is the only lithium mine operating in the US.
“Now we know that in North America there is demand, we can build world-class plants to process lithium in the US, for customers in the US. We’ve announced plans for a downstream processing entity to convert both virgin ore and recycled feedstocks into battery-grade lithium hydroxide in Richburg, South Carolina,” he added.

Localizing supply chains in turn feeds into another critical aspect in today’s mining environment: sustainability.

According to Norris, original equipment manufacturers (OEMs) have lengthy supply chains with many components and want certainty that products will reach their assembly lines on time. At the same time, the carbon emissions involved with shipping components from the other side of the world are inefficient from a sustainability standpoint, he noted.

The IRA was passed by the US Senate on August 16, 2022. It includes roughly $369 billion in green energy tax incentives, including a new, advanced manufacturing production tax credit for taxpayers who produce critical minerals, as well as tax credits promoting the sale of electric vehicles (EVs).

European legislation for battery raw materials

Europe has passed its own legislation in response, including the Critical Raw Materials Act, which sets clear benchmarks for domestic capacities along the strategic raw material supply chain and to diversify EU supply by 2030.

As part of this, up to 65% of the EU’s annual consumption of each strategic raw material at any relevant stage of processing can come from a single third country. According to Norris, this means China could become an obvious import source for Europe.

“China is sitting on the lowest-cost lithium conversion capacity and has ample capacity that’s being built in-country for lithium and other components. It seems likely that, until China runs out of capacity to serve its own needs, and while there’s an excess, Europe is today a likely export spot for China,” Norris told Fastmarkets.

“That could change and is clearly not the case in the US, which has a policy that disincentivizes that from happening,” he said.

The other issue with Europe, Norris noted, is that, while there are lithium projects and resources in the 27-member bloc, they’re neither the grade nor size to fulfill the region’s demands. The company also has not found a project in Europe that it likes enough to go public either with a small equity investment or an outright acquisition bid, he said.

“Our strategy is to have integrated production, both the resource and the conversion. We will only go long on one of those if we know that we have a plan ultimately to put them together to match. And the challenge in Europe is, we don’t have that resource yet, even though we continue to evaluate sites for potential conversion plants,” he added.

This means the company is pursuing alternatives to grow its portfolio, including its recent investment in Canada’s Patriot Battery Metals Inc.

Career path

Chemistry has been an important part of Norris’ life since his early years. Growing up near Philadelphia, in the US state of Pennsylvania, he was the eldest of three children. His parents were from the Midwest, and both graduated from Michigan State University.

His father, a patent lawyer, was an electrical engineer by background, but Norris had different plans for his career.
“I actually originally thought, I’ll go to medical school, because it was technical, well-planned and structured. But when I got into a pre-med program, I found myself questioning whether I was really interested,” he said.

“So I went through a pre-med program, which was heavy on the sciences, and came out with a chemistry degree, and instead of going to med-school, I went into industry,” he added.

Norris graduated from Colgate University, a liberal arts college in Hamilton, New York. His first job was at Rohm and Haas, a large, well-established specialty chemicals firm that went on to be acquired by Dow Chemical in 2008. It was here that his push to work in industry, paired with collaboration with customers, was born.

“Rohm and Haas really drove my interest in going into industry due to its portfolio of really interesting specialty products and its very collaborative way of partnering and working with customers,” he said. “That’s actually a big theme for me in my career. I’ve always come at business initially from a commercial perspective, a sales perspective, a customer perspective.”

His work at Rohm and Haas extended to include involvement in investor relations, the part of an organization Norris calls the “outside-in” world.

“It’s that outside-in way of thinking of what the world is, what the world needs and wants, and how we meet that as an organization, which was very much a part of my experience,” he said. “Investor relations gives you an appreciation for almost another customer base – the one that owns your stock. It gives you an understanding of the financial aspects of how shareholders value a company and what’s important to them.”

This knowledge assisted Norris as his career progressed, and he started running businesses and developing strategy. During this period, he also gained a Master of Business Administration from Harvard Business School, in the US state of Massachusetts.

In 2001, Norris moved to American chemical manufacturing company FMC Corp. It was the start of a 16-year career at the firm, which was, Norris said, involved with serving multiple renewable or sustainability trends before they became popular.

“For example, one of the businesses I was involved in with FMC was renewable products made from materials like seaweed and wood pulp that are used in food and pharmaceutical products. People could understand the products that it used but were also really intrigued by the fact that it wasn’t using petroleum-based materials like most of the chemical industries,” he said.

At FMC, Norris worked in investor relations and corporate development, and he served as director of FMC Healthcare Ventures. In late 2008, he moved into FMC Lithium, where he was vice president and global business director.

It was Norris’ first large profit and loss job. At the time, EV maker Tesla was a key customer of FMC, which had a very strong position in lithium hydroxide. The business was eventually spun off and renamed Livent Corp in 2018.

“Along the way, I gained, largely through challenging situations – either assets that needed to be restructured or businesses that weren’t performing well – a lot of operating experience,” Norris told Fastmarkets.

Norris’ final divisional move within FMC was to its Health and Nutrition business, where he was vice president and global business director, and then became president of the unit. In 2017, FMC announced that it planned to acquire DuPont Agricultural Chemical assets, and Norris was tasked with leading the sale of FMC Health and Nutrition to DuPont.

“That gave rise for me to leave FMC, and, through a series of events, I came to know the former Albemarle CEO, Luke Kissam – and that’s how I came to the company,” he said.

Norris credits Kissam with having been an influential person in his career, along with other managers he worked for at FMC and Rohm and Haas.

Albemarle move

According to Norris, two main aspects framed his interest in joining Albemarle.

“The first and foremost were the values of the company. Albemarle is a very values-based company that puts humility, integrity, care at the top of the list of how it operates,” Norris said.

“I found these values unique relative to other companies at which I had worked in my career. When I came to Albemarle, I saw that not only in the CEO, but in the culture throughout the company,” he noted.

“Secondly, having been in the lithium industry, I recognized that Albemarle was the bee’s knees for lithium!” he added.

Albemarle was the business to be in for lithium, Norris said, because it had the world’s best resources, a presence on multiple continents and the best lithium specialties business.

“The capability of taking lithium salts and derivatizing them is a skill set. The further you go in doing it, the more differentiated your offering [and] the less people are able to do what you’re able to do, because there’s more know-how involved,” he told Fastmarkets.

“You’re also often getting into higher value; the value of the product and its use is greater than the cost of the product itself. People are more focused on what that product does to enable something than they are on how much it costs. So that franchise, coupled with the values, is what really attracted me,” he added.

There is, Norris admitted, a third, unofficial reason why Albemarle was attractive: its location in Charlotte.

His wife and three children, who had moved with him to Charlotte when he joined FMC a decade earlier, had remained there when his various roles within the company took him back to Philadelphia. As Norris considered his next move after FMC, he said, the collective family hope was for an opportunity closer to home.

“I wound up joining an incredible company whose corporate headquarters is a couple of miles away. So, I got very lucky!” he said with a laugh.

He returned to Charlotte in January 2018, when he joined Albemarle as chief strategy officer. In this role, he managed the company’s strategic planning, mergers and acquisitions (M&A) and corporate business development programs, as well as its investor relations efforts.

Later that year, he was appointed president of the lithium global business unit, which became the energy storage global business unit in January 2023.

Family time is important to Norris; a keen traveler, he has to regularly entice his son and two daughters – who now live outside Charlotte – to join family holidays by creating “really elaborate vacations,” he joked. Some of these involve skiing, a sport Norris is passionate about. Other times, he plays golf, although not particularly well, he noted.

M&A’s role at Albemarle

M&A will play an important role for Albemarle, particularly in the latter part of the decade, when the company’s existing operations start to fall short of their demand requirements, Norris said.

Those operations include a 49% stake in Talison Lithium Australia Pty Ltd, a joint venture with Tianqi Lithium Corp and IGO Ltd that operates the Greenbushes lithium mining and processing operations in Western Australia.

Starting in 1888, Greenbushes is the longest continuously operated mining area in Western Australia. It has been upgraded and expanded over the decades to increase production and incorporate new technologies while demand for lithium minerals has grown.

Additionally, Albemarle, in partnership with Chilean economic development agency Corfo, produces lithium from brine in the country’s Salar de Atacama, located in the Antofagasta region. It then processes it into lithium carbonate and lithium chloride at the La Negra conversion plant nearby.

“The mine supply out of Greenbushes in Australia and the Salar de Atacama in Chile is not infinite – they will reach a point where there’s only so much more we can do,” he noted.

“We can improve yields in all cases, we can get smarter about how we operate, get more efficiencies, but the growth of what can come out of those resources starts to taper off towards the end of the decade,” he told Fastmarkets.

And then, Norris said, Albemarle will need new resources. This will come from a three-pronged approach: existing portfolio projects; exploration; and M&A, he noted.

To this end, Albemarle recently sweetened its bid to acquire Australian miner Liontown Resources, which had rebuffed Albemarle’s overtures in March. Liontown has granted Albemarle the exclusive right to a limited period of due diligence in order for the proposal to be made binding. If the $4.3 billion proposal is made binding, Liontown has said its board would accept it.

Working local

A central theme of the regulation around supply chains has appeared to pit the US against China, the country through which most of the battery components or lithium consumed in the world passes. But Norris does not see it that way.

“China is the largest automotive market in the world for EVs and is expected to remain so for years to come. Tesla is a huge operator in China, but certainly there are large domestic EV companies in China, including BYD,” he said.

“Increasingly, our contract relationships are with OEMs, which are getting directly involved in making sure they have enough lithium for all the investments they’re making in the regions where they operate around the world,” he told Fastmarkets.

“The difference, as we look at our supply chain, is that we supply locally. I would argue that makes us different than most any other lithium supplier, because we operate on multiple continents,” he added.

Norris acknowledged that countries such as Chile and Australia, where the company has large-scale operations, typically export their lithium products due to the lack of a large domestic automotive sector.

“There are going to be choices to be made as time goes on, but if you think about the footprint Albemarle has in China, the footprint we have in the US and the footprint we’d like to have in Europe, the idea would be to supply locally. Then, increasingly less material would leave those regions and would instead supply it,” he said.

The company has a capital execution campaign for lithium conversion projects at Qinzhou and Meishan in China as well as at the lithium hydroxide processing plant in Kemerton in Australia. It also plans to extend its salar yield in Chile.

Partners throughout the supply chain

Norris said the company is aware that it cannot have a majority supply position with every OEM but will instead pick and choose like-minded partners it can work with throughout the supply chain.

For example, the company has an agreement with Ford Motor Co to supply more than 100,000 tonnes of battery-grade lithium hydroxide for roughly 3 million future Ford EV batteries. The five-year supply deal starts in 2026 and continues through 2030.

This is just the start, Norris said; both Albemarle and Ford are committed to achieving supply chain circularity through collection and recycling, he noted.

OEMs are also laser-focused on lithium technology and the changes taking place in battery chemistries, he added.

“There has been so much focus on the cathode, but if you start to introduce lithium in other areas in the cell, you can actually increase its density,” he said.

The company is constructing a large innovation center north of its headquarters called the Albemarle Technology Park. The facility, which is anticipated to have initial occupancy by early 2025 and be completed by late 2026, is designed for materials research, advanced process development and acceleration of next-generation lithium products to market.

At Kings Mountain, Albemarle is already working at pilot plant scale to create batteries with new chemistries, Norris noted. “We want to see how these chemistries would work in a battery design, because the only way to innovate for your customer is to walk in their shoes,” he added.

Supply and demand

Albemarle remains bullish on the prospects for lithium demand growth from EVs and the energy storage sector. Albemarle forecasts that global EV sales remain on track for +40% year-on-year growth, with seasonal acceleration in the second half of the year.

Norris himself drives an EV. “I have driven EVs for some time. I am now driving my second EV!” he said with a laugh.

According to Norris, Albemarle is aligned with consensus analyst forecasts that EVs will have a penetration rate of close to 50% of the vehicle fleet by the end of the decade. This implies demand for close to 4 million tonnes of material on a lithium carbonate equivalent basis, he said.

“This is an industry that, not too long ago, and certainly in my career lifetime, a world-class plant used to be 20,000 tonnes. Now, world-class plants are 100,000 tonnes, and we can’t get enough of them to keep up with all that demand,” he added.

Despite projections for market surpluses, Norris noted that projects continue to miss on time and budget. “If that trend continues, I think you could be worried about choking off the demand that would otherwise be there, because supply may not be able to keep up,” he said.

The factors surrounding supply constraints are multiple, he noted.

“Ultimately, we’re going to be challenged by the end of the decade to have enough mine resources that are economic and online to supply that growth. But currently, we’re most challenged globally around conversion capacity and the ability to build conversion capacity on time and on budget outside of China,” he said.

“Very few companies have proven they can do that. Albemarle has just started sampling materials from Kemerton, Australia, this year for qualification, making it the industry’s first such plant producing outside China. But it was painful to get to that place – there was a lot of learning, and we as an industry need many others to go through that same learning curve,” he added.

According to Norris, the only place really proven to build plants when they need to be built, with speed of execution and a low capital cost, is China.

“We are the largest Western player in China – it’s a very big opportunity and business for us. But increasingly, our view will be to use our assets there to serve the local market. And we need and are now building assets elsewhere to serve other markets, and most importantly, the US,” he told Fastmarkets.

“Those are the growing pains that this industry has to go through to avoid a shortfall by the end of the decade. As we look at it, it’s going to be a heavy lift in order to avoid that shortfall,” he added.

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.

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