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Betting On Lithium

Novolyte gears up to supply critical electrolytes for car batteries

by Marc S. Reisch
September 6, 2010 | A version of this story appeared in Volume 88, Issue 36

Credit: Novolyte
A technician works on a developmental electrolyte formula in Novolyte’s new R&D center in Cleveland.
Credit: Novolyte
A technician works on a developmental electrolyte formula in Novolyte’s new R&D center in Cleveland.

Rechargeable lithium-ion batteries are poised to become the power source for a new generation of electric cars. As battery makers ramp up their capacity over the next few years in anticipation of an increase in demand, so are battery component providers such as Novolyte Technologies. Its goal is to be the leading global supplier of electrolytes—the substance that allows an electrical charge to shuttle between a battery’s anode and its cathode.

To further that goal, Novolyte’s owner, private equity firm Arsenal Capital Partners, is arranging a joint venture of Novolyte’s electrolyte business with South Korea-based Foosung. Novolyte, a former unit of chemical maker Ferro which Arsenal purchased in 2008 for $60 million, will be split into two parts.

The joint venture, Novolyte Technologies, will retain its current management when the deal closes by the end of December. Foosung, a maker of high-purity lithium hexafluoride used in electrolyte manufacture, will contribute $30 million to the venture, including the cost of a yet-to-be-built lithium salt plant.

Novolyte’s other businesses in aryl phosphorus derivatives and specialty glycol diether solvents will be renamed Novolyte Performance Materials and will also be operated by current managers.

Ed Frindt, Novolyte’s president and chief executive officer, tells C&EN that the joint venture will not just count on automotive demand to increase electrolyte sales. It also expects increased use of lithium batteries to store energy generated by the sun and wind.

“We’ve seen a lot of global growth in the last two to three years, and excitement in the U.S. as the Obama Administration came in and the government gave the electric car industry a boost,” Frindt says. The firm calls itself the only Western Hemisphere maker of lithium battery electrolytes, which are typically lithium salts dispersed in a mixture of organic solvents. At 5.5% of total battery pack costs, electrolytes claim a $330 million stake in today’s battery market, cleantech experts Lux Research estimate.

One of the biggest boosts came about a year ago when the U.S. government started to hand out $2.4 billion in grants for battery and electric drive projects under the American Recovery & Reinvestment Act of 2009 (C&EN, Aug. 10, 2009, page 9). Novolyte netted $21 million to help it ramp up electrolyte capacity in Baton Rouge, La.

Other companies benefited from the government’s largess as well, including many potential U.S.-based customers for Novolyte’s electrolytes. Dow Kokam, for instance, received $161 million to advance plans for a lithium-polymer battery plant in Midland, Mich., that would supply 60,000 vehicles a year. LG Chem’s Compact Power unit got $151 million to help it produce lithium-polymer batteries.

Frindt tells C&EN that Novolyte would have expanded the Baton Rouge site, where it has made electrolytes for the past 30 years, even without government help. The firm already had planned to triple electrolyte capacity to 4,500 metric tons per year, but with the government investment, it plans to ramp production up to 14,500 metric tons, which is enough for at least 100,000 hybrid-electric or all-electric vehicles per year.

The government grant will allow Novolyte to supply a big chunk of U.S. automotive demand for electrolytes, which Frindt sets at as much as 25,000 metric tons by 2020, “depending on how fast the market for electric vehicles grows.” The firm can also supply Asian battery makers from a 3,500-metric-ton plant, now being expanded to 6,000 tons, that it opened in 2005 in Suzhou, China. From there it competes against Japanese electrolyte makers such as Mit­su­bi­shi Chemical, Mitsui Chemical, and Ube, as well as a host of smaller Chinese firms.

Not everyone is as bullish on the electric car market. “We’re likely to see limited adoption of electric cars” in the next few years, says Steven Minnihan, an associate at Lux. Unless the government provides massive subsidies to buyers of such vehicles, or a big spike in the price of oil drives up gasoline costs, electric vehicles will be too costly for most buyers, Minnihan expects.

By 2015, he predicts, global sales of lithium-ion batteries for electric vehicles will reach just $6 billion, up from $2 billion this year. Still, electric vehicles are likely to be 1% or less of the overall car market. As global battery capacity increases after 2015, Minnihan believes costs will decline and electric vehicle adoption may increase more rapidly.

For its part, Novolyte is looking beyond the automotive market; it is also planning on demand by utilities for energy storage devices. “Solar and wind farms need someplace to store power” and make it available when the wind doesn’t blow or the sun won’t shine, Frindt points out. Lead-acid and nickel-metal-hydride batteries are already used on a growing number of energy farms. But as prices for lithium batteries drop and energy storage capabilities increase, Frindt expects to see lithium power packs displace the alternatives.

To advance its technical expertise in electrolytes, Novolyte recently added a lab at its Cleveland headquarters staffed with eight researchers exploring electrolyte formulations with better stability and high-temperature performance. Aiding in that effort is a lab attached to its China facility with 17 researchers.

The research groups are also developing nonflammable electrolytes to reduce the possibility of battery fires, a problem that led to a spate of computer battery recalls in 2006 (C&EN, Dec. 17, 2007, page 26). Other projects include gel polymer electrolytes that perform better than liquids and ionic liquid-based electrolytes for high-temperature applications and improved operating voltage, says Barry Misquitta, Novolyte’s vice president of energy storage.

Other suppliers will come to the U.S. in time and compete locally with Novolyte, Frindt acknowledges. “But our processing competence, know-how, and global manufacturing position will give us a competitive edge,” he says.



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