China's Hunan Yuneng to build Spain battery LFP plant

Chinese battery cathode producers have continued to expand investment in the overseas market, with the country's largest lithium iron phosphate (LFP) producer Hunan Yuneng planning to build a plant in Spain.

Yuneng plans to invest 982mn yuan ($135.5mn) to build a 50,000 t/yr LFP production plant in Spain's Extremadura region. The firm aims to complete the site construction in 15 months after obtaining approval from the authorities.

It will establish a subsidiary Yuneng International (Spain) New Energy Battery Material to develop this project. It did not disclose more details such as the launch dates.

"This project is to strengthen the company's position in the global market and meet demand from overseas consumers, on the back of growing demand for LFP cathodes in the overseas market driven by the development of new energy vehicles outside China, especially in Europe," Yuneng said.

Yuneng produced 504,400t of LFP cathodes in 2023, up by 50pc from a year earlier, with sales also rising by 56pc to 506,800t over the same period. It has achieved a nameplate capacity of 700,000 t/yr for LFP as of the end of 2023.

It is also expanding capacity for another emerging battery cathode material, lithium manganese iron phosphate, which has higher energy density and allows for a longer driving range in electric vehicles (EVs), better performance in winter temperatures, and has lower manufacturing costs compared with LFP.

Overseas expansions

A growing number of Chinese battery cathode firms have accelerated their investment in overseas production projects, such as in France, Morocco and South Korea, to diversify resource origins and meet market entry conditions to the US required by the Inflation Reduction Act, and to cope with restrictions on key battery materials in the EU's Critical Raw Materials Act.

Argus forecasts total demand for EV battery cathode material will reach 7.7mn t by 2034, from only 1mn t in 2022, with LFP expected to continue to take up the bigger share compared with ternary battery cathodes. Argus-assessed costs for cathode active material LFP were $13.95/kwh on 23 April, up from $12.31/kwh at the start of this year.