Chemical Firms Target Batteries

Despite promises of heady growth for the lithium-ion battery business, makers of lithium chemicals and other battery raw materials have been cautious in their investment. Now, a few firms are starting to put their money down.

Albemarle says it plans to add up to 50,000 metric tons per year of capacity for battery-grade lithium carbonate and hydroxide by building a new facility, likely in the U.S. or Asia. The plant would be a major addition to the global lithium chemicals market of about 160,000 metric tons.

The announcement, made prior to an investor meeting Albemarle held to promote its lithium chemicals strategy, comes just two months after the firm opened a $200 million lithium carbonate facility in Chile.

Japan’s Ube Industries, meanwhile, revealed plans to boost its capacity for polyolefin Li-ion battery separators in Ube, Japan, and build a new plant in Sakai, Japan. Together, the projects will increase Ube’s separator output by some 40%. Sumitomo Chemical recently said it will double its separator capacity.

The battery raw material projects anticipate growing demand for Li-ion batteries to power electric vehicles and store electricity generated from renewable sources. Yet, earlier predictions of growth in those industries haven’t come to pass. Lithium chemicals sales for the industry’s three major players—Albemarle, FMC, and SQM—have been fairly flat for the past three years.

Robert Baylis, manager of minor metals research at the London-based consulting firm Roskill, points out that high battery costs still weigh on the vehicle market and the electricity storage market is still in its infancy.

FMC and SQM have invested little in their lithium chemicals businesses recently, Baylis notes, while acknowledging the two firms have some internal reasons for their caution. Most activity has been by several start-up companies trying to enter the business.

At the investor meeting, Albemarle executives indicated they are exercising no such caution. David Klanecky, vice president of the firm’s energy solutions business, projected 20–30% annual growth for electric vehicles and even higher growth, albeit from a small base, for energy storage.