Raw material ambition: Local content to global supply
The overwhelming response to the ACC PLI scheme has set the ball rolling for giga-scale manufacturing of battery cells in India. It has also opened up the space for raw material companies. "I think India can become a very big export hub for battery materials in the future, the demand is going to be a lot in India and globally," says Vikram Handa, MD – Epsilon Carbon Pvt Ltd, as he speaks with Ashok Thakur, Editor-in-chief – ETN, about the challenges and scope in the development of a raw material ecosystem in India.
What are Epsilon Carbon's plans with respect to raw material supply, for battery manufacturing in India?
About two years ago we commissioned a carbon black manufacturing unit in Bellary, Karnataka, with a capacity of 115,000 tons/year. That carbon black is furnace black, which is mainly focused on the tire and the auto segment. We are now looking at expanding that facility to 200,000 tons, with an investment of about ₹400 crore starting this year. Now, that is on the carbon black side, on the synthetic graphite side we continue to grow to further qualify and develop our products.
We have increased our coke capacity, which is the anode precursor, from 2500 tons to 17500 tons/year. This project is currently under construction, and all of that coke we will be selling to tier1 anode manufacturers in China. We plan to scale up the business, and China is the only market today that can consume such volumes. So, we are focused on supplying these materials to China right now, at the same time we continue to expand downstream as well as on synthetic graphite.
In the last 15 months, we have been sampling various grades of synthetic and natural graphite with customers globally from Korea, Europe, the US, and Indian companies who have participated in the recent ACC PLI schemes. We've had very good responses from customers, and we continue to customize materials for them. We are confident that in the coming year will be signing a few more offtake agreements that will help us further invest to take our capacity to 10000 tons by 2024, that is what we plan to have in India.
When you say you are exporting, what preparations did you do to be a global supplier?
On the coke side, we have been manufacturing this precursor coke for the last two years. The way the customer qualification goes is that we first start by giving them 5kg of the sample, which then increases to 50 kgs, and then they will take a ton of material. The break between each of these is 3-4 months. Then they take the coke and make it into an anode, and do a lot of cell testing, after which they come back and start the next stage of testing.
It's a very long process because when you submit a sample for months you don't hear back and then there might be a question about changing something and the whole process starts again. It is very iterative, but we've been quite successful with this, which shows that our coke is a very good stable premium product and can give high-performance graphite anode material. After initially taking 1ton most customers are willing to try anywhere between 20 to 100 tons lots, to see material stability. So far, we have reached the 100-ton mark with about 8 customers, and with customers, in Europe, we continue to be at the 1ton mark of qualification.
For the graphite anode material, the qualification is even more difficult. I think it's very important to understand the challenges, of an Indian company. Anyone who is in the raw material segment needs to invest in an R&D facility or a cell testing facility because the customer expects you to generate a lot of data. In Europe, material companies go out to either universities or third-party centers to generate this data, but in India, this doesn't exist,
So, we have developed an R&D facility. We currently manufacture coin cells and single-layer pouch cells and are in the process of setting up a multi-layer pouch cell facility as well, because the customers will expect us to generate all this data before they put resources into testing the material. it can take anywhere from 18 to 24 months for the graphite anode material to qualify, but usually, after 12 months and sample B testing results, the customer is comfortable giving you an offtake agreement for you to further do material development.
Tell us about your partnership with Charge CCCV (C4V). Any more similar MoUs in the pipeline?
With C4V we went through the process of a synthetic graphite qualification for a standard graphite EMG15 that we produce. After their testing, and meeting their parameters, we got into an agreement. We will begin by supplying to their New York Giga factory, and in the future to their manufacturing facility in India as well.
We are also in the process of having similar agreements with Indian and international companies because if I'm going to be producing 10000 tons in 2 years, customers need to qualify and commit today that they will take 1000 or 3000 out of that, that's how I can warrant my investment.
We are in the advanced stages of going from B to C sample testing and hope to sign a couple of more MoUs this calendar year.
When you say you will be supplying in bulk for trial, can you give us a rough idea of the quantity in bulk?
Like I said, today we can do 50 tons/ year capacity of the anode and all of it pilot-scale. When we go to 500 tons by the end of the year, that's when we will be giving customers 100-200 tons. So, when a customer takes hundred tons and runs it through his production, making cells and packs, that's when you know you can become a regular supplier. After supplying close to a ton, they will commit that the material has qualified and they want to test the next level of the sample, which is 100 to 200 tons. Hence, we are setting up this commercial-scale graphitization for being able to give this last sample.
You have partnered with Grafintec for setting up an anode material production facility in GigaVaasa – the energy technology hub in Finland; tell us more about this partnership, and how the development is shaping up?
Grafintec is a miner that owns mining resources in Finland, so we came together to set up an anode processing facility there. We studied the Nordic landscape and we decided that GigaVaasa was an amazing location to set up this facility. They have acquired a huge parcel of land there, with Freyr setting up a 20GWh factory across the road from us. We are planning to set up a 50,000-ton anode facility and I think there will be a cathode player also in the same ecosystem.
GigaVaasa offers 100 percent renewable power through the grid and other infrastructure facilities that also include a port close by. This Vaasa area ticked off all the boxes of where we would want to set up an industry like ours, which is very power-intensive, and we will also have access to local graphite so that will be a facility that will make natural graphite anode material.
We will start in 2025, and we plan to have 10,000 tons/ year of capacity over there. The idea is that we are getting to qualify with customers globally from India, and we can replicate that in India as well.
It's a unique project where I think customer offtakes will also come shortly, as they are looking for localization and to have a low-carbon footprint manufacturing process, especially since our process involves no chemicals and is all a thermal process. I'm excited about the project, we have started our permitting process and I am quite hopeful that things will progress fast over there. In our Phase1, for 10,000 tons about a ₹100-million investment will be done, because a lot of infrastructures have to be built initially; thereafter we will keep expanding with 10,000-ton modules to reach 50,000 tons.
I recently visited GigaVaasa; it is incredible how well-thought-out their project is for just the battery supply chain. They are not looking for other energy-intensive Industries, they are very focused on making this a battery hub - whether raw materials, Giga factories, or other industries that cater to this ecosystem. I hope something like this can develop in India too because it would attract a lot of investment and make ease of business. Maybe, if some States in India took the lead to develop such an ecosystem, I think it will be very good.
In 2017, the City of Vaasa in Finland started developing an area 12 km southeast of the city centre to create a zone, called 'GigaVaasa', that is devoted to the entire battery value chain. The idea was to create an energy technology hub with an innovative and sustainable environment for developing green batteries. The facility enables vertically integrated production of battery materials and cells to meet the rapidly growing demand from the EV sector and the European electrical and work machine industry. It would also support the electrification and transformation of the Finnish energy technology industry.
You are being quite an aggressive company across the globe; tell us about your plans for the global market?
In the battery space, the next two years are going to be investments. I think, by 2025 we should do about $350 million in investments between India and Finland, to grow our business. Today, we've conceptualized that we will start with 10,000 tons in India, but I feel it might become more as we talk to customers. If customers have aggressive plans then we can also scale up to 15-20 thousand tons in our Phase1.
The major investments in the next few years will go into building this capacity as we qualify with customers. On our other businesses - our carbon black business and other specialty chemical business - I think we're doing well, and as a segment, it continues to grow so we'll be further investing in our carbon black business this year to increase capacity.
Considering the recent price fluctuations of essential metals, due to geopolitical and other reasons, what is your take on raw material pricing? What is the trend like globally?
Even before this geopolitical situation, raw material prices in the battery space were on the way up, this demanded outstripping supply and it takes time to build supply capacity. While I hope the situation calms down soon, I don't see commodity prices coming down so fast, because I think this has been too big of a shift in how these markets work. In battery material, auto OEMs are coming down into tier 2 tier 3 space and making investments, and doing tie-ups to secure raw material. I see that raw material availability might be a big bottleneck for EV adoption globally on the large scale. I don't think the pricing will be the major thing, its availability will make some projects successful and some not so successful in the future.
Right now, many Giga factory owners in India are at the inception stage and many of them will announce something in the coming years; which is the best way for them to secure raw material?
It depends on the maturity of the customer. If I look at big customers in Europe who've plans to go to 100GW even at multiple locations, they are scampering to put up a pilot plant facility today of 200MW. They might have orders from auto OEMs, but their next goal of getting to 10GWh or 20GWh itself is a big challenge and I don't think they have understood the impact of the raw material availability in the future and how long it takes for this industry to develop. Auto OEMs - whether you look at Volkswagen, GM, or Ford - have understood that. and obviously, they have bigger balance sheets to look at these investments.
To grow this business and for EV adoption to happen, auto OEMs will step in and start making these investments all the way upstream, whether it's mining, processing facility, or even newtech, they will help develop that. I've seen this in China about four years ago when I visited other anode makers. They were at 5-10 thousand tons capacity, but because their customers were talking about growing in the next 5 years, the suppliers were getting ready to scale up to 200,000 tons to keep pace. That kind of alignment in partnership needs to happen between auto OEMs and Giga factories and raw materials suppliers.
What are your plans about development on the cathode side?
After developing this technology on the anode side, we are very confident in what we are doing, and also getting customer feedback about the product being good. In this case, we have patented the technology and developed it.
We started studying the cathode space about a year ago and wanted to understand how to enter it because I think other than the localization factor, in India cathode requirement will be small initially say 2 to 5 thousand tons, and will start scaling up later. We started to focus on actually making the precursors. We thought, that if we can make a very cost-efficient precursor in India, then getting the CAM technology will not be difficult.
Right now, we have signed an MoU with a Nasdaq-listed company called The Metals Company (TMC) which does deep-sea mining. We will the setting up a 1 million ton facility in India to convert these nodules that come from the bottom of the sea, into various minerals. About 30,000 tons will be a nickel-cobalt-manganese product that is ideal to make CAM for NMC batteries. It's a very innovative way of entering space, and at the same time, it's a much lower carbon footprint than nickel mining. This could be a total game-changer as far as cathode materials go.
We are, at the same time, also developing an iron phosphate project in India, where we will forward integrate that into CAM for LFP. We are focused that we want to be in the precursor space and we are discussing partnerships on how to convert this pre-CAM into CAM. Going through a pilot phase and the developing technologies will take three to five years, we'd rather partner with companies and go straight into the commercial space and have proven technologies.
Our goal is that between anode and cathode, eventually, I should be able to offer a customer in India 60 percent local content and help him comply with the PLI scheme guidelines as well. So, the anode is a starting point, but I think if we can provide both to customers it makes life easy for them also.
How difficult was it for you aggressively get into the global market?
There are a lot of challenges to entering this industry, whether it's raw materials or technology, or scalability, for us what incentivized us to get into this space was mainly forward integration. We are already a big coal tar distillation company but don't want to be like Japan which has some of the best technologies yet they are not confident in investing and setting up a big capacity because they always feel threatened by China.
I think Indian cost structure and environment and regulations are very good and can help us develop this industry. We just need to take the approach that this is going to be the future and we need to start investing, need to start incubating and need to start R&D, so that when this industry matures, we are there at a good scale.
Where we faced a real challenge is getting in touch with customers, it's not easy. Especially in the battery raw materials space, which India is not recognized for yet, that's where you get pushback from customers. If it were auto components or IT, India has a good reputation in that space so customers would welcome an Indian supplier from these industries.
It might sound easy today, but for 2-3 years we've been doing the rounds – even during COVID – and the team has done a good job in connecting with the customers. As you engage with them and they understand that you have the know-how, you can qualify, and you can fine-tune materials for them, they too become eager to work with you.
I think India can become a very big export hub for battery materials in the future, the demand is going to be a lot in India and globally. After China, we are probably the best location to set up this industry, so I hope more and more players come into this space.
If you were granted two wishes for the industry, what would they be?
The first thing I would ask for is: a few GigaVaasa-like zones in India already established, I think that would help. Second, I would ask for local content to help develop the value chain in India.
While I think the second has already been answered after the ACC PLI scheme, I hope the first one will happen soon too.