Umicore advances electrification plans: Strategy targets growth in battery materials and recycling, fuel cell catalysts

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Umicore SA is a circular materials technology company that transforms metals from end-of-life materials and by-products into pure metals and applications. The automotive sector is one of the company’s major end markets and is becoming even more important through the growth of Umicore’s battery material business, its engagement in fuel cell catalysts as well as its activities in lithium-ion (Li-ion) battery recycling, said Umicore CEO Mathias Miedreich.

Miedreich was appointed CEO of Umicore in October 2021. Prior to joining Umicore, he had spent almost 25 years of his professional career in the automotive industry with companies such as Siemens AG, Continental AG and Faurecia SE.

Miedreich told CW that he did not change his initial plans as Umicore CEO despite the geopolitical and macroeconomic volatility at the time. "We experienced, much like every other company, headwinds due to energy and raw material price increases, as well as the disruption of the supply chain in our automotive business caused by semiconductor shortages. However, because of good preparation and because of Umicore being in the game for quite some time, we were quite good in absorbing these external shocks," he said. "I was impressed with the resilience of Umicore, in terms of its pricing power and how the company’s processes enabled its customers, especially in its automotive catalyst business, to participate in those fluctuations."

Battery materials to drive growth

Electrification is at the core of the company’s growth strategy, called Umicore 2030 — RISE, so battery materials are its main growth driver. The company has announced several investments in line with the strategy, including plans to construct a gigafactory for battery materials in Ontario.

All the engineering preparation works have been completed or are close to being finalized, and the company is moving "fast and efficiently" in the right direction, in terms of permitting, Miedreich told CW. "This means we are on track to begin construction this year," he said. "Our plan is quite substantial. The first step includes installing cathode material manufacturing, but also precursor manufacturing at the same time and we are also currently looking into the next step, which includes refining, and it could also include recycling but that is something we need to decide about in the future. We are already thinking about it though as well as preparing and scouting for it."

Umicore announced plans for the gigafactory in July 2022, and in the following month the US Inflation Reduction Act (IRA) was announced. The US IRA was a "pleasant surprise and a positive shock" because it has suddenly catapulted the US, which was not a frontrunner in electrification, ahead of Europe in terms of rollout, Miedreich said.

Umicore has been involved in discussions with the European Commission, and the company believes Europe should not simply copy the US IRA. It has instead advised the commission to focus on permitting, talent and incentives, he said.

Europe lags behind North America in terms of permitting and time to market, Miedreich said. "From our own experience, Canada is much faster than Europe," he said. Electrification also requires very specific talents and know-how, and Europe should look to create the right conditions for universities, research institutes and the industry to produce the talent to advance the EU’s electrification efforts even if this approach may not have an immediate payback, Miedreich added.

Umicore also believes that if there is to be a type of incentivization or expanded scheme of grants and subsidies coming from the EU, they should be linked to sustainability and reward investments that create more sustainability. An example of possible incentivization could be the top 40% of companies delivering battery materials, in terms of scope 3 CO2 emission performance, should be eligible for beneficial tax treatment or other types of incentives, Miedreich said.

Shaping the future

Umicore’s philosophy has changed in the past three years under Miedreich’s leadership. "In my view, you must always think that you do not have the right battery technologies today and you have constantly to work to bring new batteries. The question is what the battery technology of the future is, what is the one to bet on. Once you decide that then you must build your ecosystem around that," he said.

Umicore’s approach to future battery technologies has transitioned from a passive approach where the company was listening to what cell makers wanted, to a more proactive or even aggressive approach where the company is constantly trying to introduce new technologies to the market, to solve problems for its customers, Miedreich said.

For example, Umicore has launched a high lithium manganese (HLM) technology that replaces nickel with manganese. HLM has only a third of the nickel content of traditional nickel manganese cobalt (NMC) battery technology, Miedreich said. HLM offers a better total cost of ownership than lithium iron phosphate (LFP), a technology currently used for its lower costs in the low-range segment of the EV market and is popular in China, according to Miedreich. HLM also offers longer driving ranges than LFP, equivalent safety, much more reliable state-of-charge monitoring and better recyclability, according to Umicore.

"We are now developing our HLM with five or six different customers and we will be ready to go in mass production in 2026, but we are also working on solid-state battery materials," Miedreich said.

Safety is the main reason automotive original equipment manufacturers (OEMs) want to implement solid-state batteries in EVs, according to Miedreich. "Solid-state batteries are safer than conventional lithium-ion batteries because they do not have any liquids. If you take a scissor, for example, and cut into the battery, nothing will happen, but if you were to do that to a Li-ion battery, such as that of a smartphone, there would be a thermal event," he said.

Umicore has also recently joined forces with Idemitsu Kosan Co., Ltd., a leader in electrolytes, to develop a new battery material called catholyte. Catholytes are a combination between electrolytes and cathodes in nonmetallurgical chemistry and can be a game changer in terms of power density for solid-state batteries, Miedreich said.

"In addition, we are working on some more future-looking technologies such as the sodium-ion technology, which replaces the expensive and rare lithium with sodium that can be found abundantly everywhere in the world. We are working extremely hard on this technology that will probably be more relevant in the second half of the decade going toward 2030," Miedreich said.

For the development of all these different technologies, the large network of partners the company works with at research institutes, universities and other technology companies plays an important role, Miedreich told CW. "I believe that the company with the best ecosystem in that environment will be the winning company. The strategy we are rolling out with our partners is that it is not so much about yourself because the task is simply too big," he said.

Fuel cell catalysts, battery recycling

Fuel cell catalysts and battery recycling are other areas where Umicore is expanding its presence through investments, such as the fuel cell catalyst plant at Changshu, China, the company announced in July 2022 and that will be the world’s largest fuel cell catalyst plant when it is up and running, Miedreich said. The company already operates two fuel cell catalyst plants — one in South Korea and a smaller unit in Germany.

"The plant in China will support the increasing demand, while the decision to locate our third fuel cell catalyst plant in China was easy since it is the world’s biggest market for fuel cell catalysts. It is a local-for-local approach, while we are progressing very well with the permitting and so far, we are completely on track with our planning," Miedreich said.

China is the biggest market for commercial vehicles, and the Chinese government has decided that its commercial vehicle electrification strategy will mainly go through fuel cells and fuel cell technology, he added.

Umicore has been active in China for many decades with different types of product. Its presence is especially strong in automotive catalysts, and it has made significant progress in the last three years in fuel cells from an end-market point of view, Miedreich said.

The company, meanwhile, already has 15,000 metric tons per year of battery recycling capacity in Europe and is looking into scaling this up to 150,000 metric tons per year with a new facility in the region that will be operational by the end of 2026, according to Miedreich. "I am absolutely convinced there is no way around recycling of batteries for two reasons. One is to secure the availability of battery-grade metals that will only be possible if we include recycling into the stream. The other is that recycling is the only way to reach the CO2 targets of batteries because the recycled CO2 footprint of metals is up to 80% lower than virgin metals that you extract from the mine," he said.

This means that battery recycling helps secure the supply of metals required at a very low CO2 footprint, Miedreich said. "It is because of this importance of recycling for the environment as well as for the battery materials market that there are already mandatory recycling quotas in Europe that require the use of a certain percentage of locally recycled battery materials in the supply chain. This will soon happen in the US too," he said.

Expectations for 2023

Umicore expects 2023 to be another record year in catalysts because it is "very confident" it can outperform last year, which broke records, Miedreich said. "This expectation is based on our market performance that has been very good so far this year. The market-share gains that we have recorded, the volumes we can gather but also the mix that we have are favorable," he said.

Umicore anticipates headwinds from inflation, but also in terms of precious metal pricing that will be weaker than last year. "However, we will be able to compensate it with operational efficiencies and thus, we believe that in 2023 the catalysis business will outperform 2022 in revenues and earnings," Miedreich said.

The rechargeable battery materials business unit, which forms the biggest part of Umicore’s energy and surface technologies (E&ST) business group, performed broadly during the first quarter of 2023 in line with the first quarter of last year, and its earnings in full-year 2023 will be on a par with the 2022 level, the company said.

Umicore is preparing for a large ramp-up of volumes that will happen in 2024 because over the last 18 months the company has signed several new contracts with customers, Miedreich said. "These new deals will help us already in the last quarter of this year, but then very much in 2024 to have a very significant growth on the output for our battery materials. That will be the starting point for a growth trajectory that will not end probably for the next 20 years, as the automotive market is becoming fully electrified," he added.

Meanwhile, the company’s recycling business group is doing "very well" operationally despite the effect of lower precious metal prices, Miedreich said..

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