VW-Umicore Closing In On Battery JV Agreement

Volkswagen and Umicore are getting close to finalising their battery materials joint venture in Europe.

An announcement is expected soon, Umicore CEO Mathias Miedreich said at a press conference in Nysa, Poland, where the Belgian company opened Europe’s first cathodes plant. Once signed off, the JV with VW will be a multi-billion-euro enterprise that could reach into battery recycling too, he added.

Negotiations are down to the finer points. VW wants a secure supply of battery materials, and to sand down the wild swings in price that have become a characteristic of markets like lithium and nickel. Umicore stands to gain a huge customer upfront as it builds out the Nysa operation. But it wants to protect its IP and needs to charge VW a price that ensures a return on capital employed of more than 10%.

The EV cathodes market is defying the usual protocol seen in many parts of the chemical industry, outside the ingredients space: the usual middle man between chemical supplier and final goods maker is disappearing. Four years ago, Umicore’s customer base was comprised of cell makers. But over the last 18 months, car manufacturers are dipping their toe in battery materials directly, whether that’s buying a stake in a precious metals mine or setting up their own EV battery shop. As a result, Umicore’s status has gone from a tier 2 supplier to tier 1. A VW or Stellantis can either use the cathodes for their own in-house batteries or chose to allocate the material to a specific third-party cell manufacturer.

Umicore hasn’t given an investment figure for Nysa, but the project will account for a good chunk of the EU660 million that Miedreich has set aside for the current spending wave. If all goes according well, the JV with VW could also be located around Nysa. The plant currently covers 20 hectares of a 90-hectare plot, and work has already started on the next phase of the project. By 2023, capacity should reach 20 Gwh, but there’s potential for 10 times that. VW alone would represent 160 GWh, and Umicore has another partner, Automotive Cells Company, on board for another potential 46 GWh, according to the CEO.

No-one can accuse Umicore of rushing into this. The Belgian company, which has been researching and manufacturing battery materials for nigh on 30 years, serving the EV market from its two plants in Korea, and another China. Nysa is the missing link in its mine-to-cathode operation in Europe. It’s also earmarked another EU1 billion for breaking into the North American market as the EV market increasingly gets drawn along regional lines.

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