Proposed Finnish LFP cathode plant expands Europe’s battery value chain

Competition with Asia to bring the battery value chain to Europe intensifies as mining company Finnish Minerals Group and battery cell manufacturer Freyr Battery explore the possibility of producing LFP cathode material

LFP cathode material – based on lithium, iron and phosphate – is needed especially in large-scale energy-storage battery segment and is used for battery packs in electric vehicles (EVs) with short driving ranges.

Nickel cobalt manganese (NCM) chemistries dominate the Europe and US markets, accounting for around 70% of all EV batteries. In China, though, LFP battery chemistry accounted for more than 80% of all new EV sales in 2022.

The durability, speed of charge and lower-cost components in LFP batteries make them an attractive alternative to NCM, as does the fact that – despite a current dearth of recycling options – they are less exposed to metals including nickel and cobalt with environmental, social and governance (ESG) issues.

“LFP is more thermally stable than NCM [battery chemistries] and is not affected by ESG or supply concerns that come with nickel and cobalt. Most importantly, its low cost makes it ideally suited for entry-level EVs,” Muthu Krishna, Fastmarkets’ battery manufacturing cost analyst, said.

Finnish Minerals Group and Freyr Battery signed a joint development agreement to assess the feasibility of establishing an LFP cathode material works in the Finnish city of Vaasa, they said on Thursday February 16.

The companies aim to establish a joint venture upon successful completion of preliminary phase studies and receiving investment approval, they also said.

“We clearly see that both the NMC and LFP battery value chains need to be built in Europe as the technologies complement each other and there is demand for both, depending on the final application.” Finnish Minerals Group chief executive officer, Matti Hietanen, said.

“We are closely following the EU debate on how to secure internationally competitive framework conditions for the battery industry in Europe,” Hietanen added.

“We have also seen other OEMs such as Tesla and Ford commit to using LFP – it’s clear that LFP will play a key role in the transition to e-mobility this decade if we are to see mass adoption of EVs,” Krishna added. “Therefore, this announcement to develop LFP cathode material in Europe is a crucial step in localizing supply chains and reducing reliance on China, which has historically dominated LFP production.”

Since these types of projects are very capital intensive, government support is needed to secure their development. The collapse of the Britishvolt gigafactory project in January highlights the difficulty of getting new EV projects off the ground without firm state backing.

“Start-ups have a lot of challenges so it is not surprising that some fail, especially if they are starting from scratch,” William Adams, head of battery raw materials research at Fastmarkets, said about Britishvolt’s collapse.

“They need the know-how and the equipment to build the production lines at a time when many other battery factories are also being built or expanded,” he added. “And they need to lock in a supply of battery raw materials, again at a time when many others want to secure supply, too.”

The race is on to secure battery materials for the future

Fastmarkets’ research team highlighted how Europe is competing fiercely at a global level to secure raw materials critical to its energy transition goals to feed its nascent battery value chain.

Lithium – a key component in the production of rechargeable batteries for EVs – has been in a supply-demand deficit for the past two years and is set to record a 14,300 tonne deficit in 2023, Fastmarkets’ research team predicts.

A revival in demand from the downstream battery sector for EVs has propelled prices dramatically higher over the past two and a half years.

Fastmarkets’ weekly assessment of the lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price range exw domestic China was 410,000-440,000 yuan per tonne on Thursday, down by 21,000-35,000 yuan per tonne from 445,000-461,000 yuan per tonne on February 9 but up from a multi-year low of 37,000-41,000 yuan per tonne in July-October 2020.

Use our long-term forecasts to predict battery materials supply and demand

Keep up to date with global market insights and predictions for 2023 and beyond with our NewGen forecasts.

What to read next
The US aluminium industry is experiencing challenges related to tariffs, which have contributed to higher prices and premiums, raising questions about potential impacts on demand. Alcoa's CEO has noted that sustained high prices could affect the domestic market. While trade agreements might provide some relief, analysts expect premiums to remain elevated in the near term. However, aluminum demand is projected to grow over the long term, supported by the energy transition and clean energy projects. To meet this demand, the industry will need to increase production, restart idle smelters and address factors such as electricity costs and global competition.
The DRC is set to decide on the future of its cobalt export ban on June 22, potentially extending, modifying or ending the policy. Aimed at boosting local refining and value creation, the ban has left global markets uncertain, with stakeholders calling for clarity as cobalt prices fluctuate and concerns over long-term demand grow.
Read Fastmarkets' monthly battery raw materials market update for May 2025, focusing on raw materials including lithium, cobalt, nickel, graphite and more
To increase transparency, Fastmarkets has further clarified how it handles price movements during periods of low liquidity. Factors that Fastmarkets may consider during times of low liquidity include, but are not limited to: market fundamentals such as changes in inventory levels, shipments, operating rates and export volumes; relative fundamentals of similar commodities in the same […]
Cobalt Holdings plans to acquire 6,000 tonnes of cobalt. Following their $230M London Stock Exchange listing, this move secures a key cobalt reserve. With the DRC’s export ban affecting prices, the decision reflects shifting industry dynamics
The recent US-China agreement to temporarily reduce tariffs is a major step for global trade, with tariffs on US goods entering China dropping from 125% to 10% and on Chinese goods entering the US decreasing from 145% to 30% starting May 14. While this has boosted markets and created optimism, key industries like autos and steel remain affected, leaving businesses waiting for clearer long-term trade policies.