Northvolt bankruptcy rattles suppliers

The recent bankruptcy of the battery maker Northvolt is rattling companies counting on the Swedish firm as a customer or supplier. Some companies that were planning facilities to supply Northvolt with raw materials are now abandoning their projects or seeking new partners.

About a week after the bankruptcy, the oil and gas firm Galp announced it would not proceed with plans to build a lithium refinery in Portugal. Northvolt was part of the joint venture behind the project and had committed to purchasing half of the plant’s output. After Northvolt stopped investing earlier this year, Galp searched for another company to join the venture but couldn’t find a replacement.

Meanwhile, Cinis Fertilizer says it will delay construction of a facility in Sweden intended to convert waste sodium sulfate from Northvolt’s battery materials production into potassium sulfate fertilizer. Cinis started looking for new sources of sodium sulfate in July after Northvolt warned of delays. Cinis was able to buy the raw material from other suppliers, albeit at a higher price, and started making fertilizer at a smaller plant in September.

The experience is making Cinis cautious about other projects. The firm says it won’t break ground on a facility adjacent to Ascend Elements’ battery recycling plant in Kentucky until Ascend makes more progress.

The aluminum maker Hydro says it will continue financing Hydrovolt, a battery recycling joint venture with Northvolt, but it is looking for a new partner to ensure Hydrovolt’s long-term health.

Hydrovolt’s Norwegian facility crushes used batteries into black mass, a powder containing key battery metals. Northvolt was to extract the metals at a hydrometallurgical recycling facility in Sweden. A Hydrovolt spokesperson says the bankruptcy will have “limited impact” on the recycling plant’s activities and notes that Hydrovolt has other black mass customers, including the Finnish energy company Fortum.

The fate of other planned Northvolt suppliers is unclear. Michael Sanders, a senior advisor at the battery industry forecasting firm Avicenne, says most of them were waiting for Northvolt to ramp up before committing to their investments.

For example, Senior Technology Material announced plans in 2021 for a $200 million battery separator plant in Eskilstuna, Sweden, to supply Northvolt, but Sanders says the company never acquired land to move forward. Last year, Shanghai Putailai New Energy Technology said it was considering a $1.4 billion Swedish graphite processing plant, but the company hasn’t secured permits for the project.

Other projects in the region are moving forward. In September, the mining firm Talga broke ground on a plant to produce graphite anode materials in Luleå, Sweden. “What happens at Northvolt has no impact on us,” Talga Managing Director Mark Thompson said on a recent investor call. “It’s a challenging environment, but there’s a lot of both government and customer support for having local battery supply on that continent.”

Northvolt’s bankruptcy is part of an industry-wide reassessment of the demand for electric vehicle batteries. Companies like BASF and Umicore have pulled back on battery materials investments. Sanders says these companies overestimated the near-term growth of battery demand but adds that Europe needs locally produced battery materials over the long term, especially for materials like graphite where production is highly concentrated in China. “That has logic beyond Northvolt,” he says.