Johnson Matthey (JM), a leading player in precious-metal chemistry, says it plans to sell its lithium-ion battery materials business and exit the sector. The battery business was one of two the British firm was developing to counter an expected decline in its core business of making automotive catalytic converters.
The company cites the rapid commoditization of battery materials and competition from “alternative technologies” as reasons for its exit decision. JM says it is making the move after a detailed review ahead of critical investment milestones.
JM was developing a nickel-rich cathode material it called eLNO. It has invested about $200 million in R&D to develop the cathode material and has valued the assets of the business at about $450 million. The business has about 430 employees, most of whom are based in the UK.
The firm had been planning to open a 10,000-metric-ton-per-year cathode material plant in Poland in 2024 and had already begun planning the construction of a second, bigger plant.
Until now, JM had been touting the cathode material as helping it transition away from its main business of selling catalytic converters, which is expected to decline as the world transitions away from combustion-engine vehicles.
In an interview with C&EN earlier this year, Johnson Matthey’s CEO, Robert MacLeod, acknowledged the high cost of investing in battery materials and said its other new business—providing technology for making low-carbon and carbon-free hydrogen—requires much less capital. Still, MacLeod expressed confidence in the cathode material’s potential for success.
JM’s exit from battery materials raises questions about how the company can replace income from its catalytic converter business over the long term, according to a report published by Jefferies Group, an investment firm. “Ultimately, the challenge remains,” the report says.
Jefferies expects JM will have to write off much of what it has invested in the battery business. “We question the ability to realize much value from the £340m [$450 million] net asset base,” the report says.
In a separate announcement, JM said MacLeod will step down as CEO on March 1, 2022, to be replaced by Bayer crop science executive Liam Condon.