Germany’s chemical producer BASF have reached a nickel and cobalt supply deal with Russian miner Norilsk Nickel (Nornickel) to meet buoyant demand for batteries powering electric vehicle (EV).
Under the background of a new planned cathode plant to be built by BASF in Finland, the deal could add new impetus to European efforts to enhance local capacity for battery manufacturing in a market dominated by Chinese and Korean producers.
Global chemicals giant BASF will set up a factory to produce battery cathode materials in Harjavalta, Finland, nearing a nickel and cobalt refinery run by Nornickel, the world’s second largest nickel producer and a major cobalt manufacturer. The agreement could guarantee BASF a long-term and convenient supply of nickel and cobalt feedstocks.
“With the investment in Harjavalta, BASF will be present in all major regions with local production and increased customer proximity, further supporting the rapidly growing electric vehicle market,” said Kenneth Lane, president of BASF’s Catalysts division.
Industry analysts believe cobalt and nickel, which are key ingredients for high-tech cathode chemicals, will be critical factors for any boost in EV range.
BASF squeezed into the EV battery market with a set of acquisitions and investments from 2012 to 2015, and now among its main competitors in the area of cathode materials are Europe’s Umicore and Johnson Matthey as well as a range of Chinese firms including Beijing Easpring and Ningbo Shanshan.
The Harjavalta plant, which will be able to provide the supply of battery materials for about 300,000 electric vehicles a year, is planned to be commissioned in late 2020.
The move comes as part of BASF’s plans to invest up to 400 million euros ($462 million) as a first step in building plants for producing cathode materials in Europe.
BASF has been so far producing nickel manganese cobalt oxide (NCM) cathode materials in Elyria, Ohio, and lithium nickel cobalt aluminum oxide (NCA) cathode materials, which are used in Tesla cars, at its BASF TODA Battery Materials joint venture with Toda Kogyo in Japan.
An estimate by Brokerage Liberum earlier this year said that cathode materials alone could take up about 25 percent of EV battery’s total costs, depending on the prices of cobalt and nickel.
In the wake of the mutual agreement, BASF shares rose 1.1 percent by 0854 GMT while Nornickel was up 0.5 percent.
“The agreement is an important element of Nornickel’s broader strategy to expand its presence in the global battery materials market and establish long-term cooperation with leading producers of cathode active materials,” said Sergey Batekhin, Nornickel’s senior vice president.