<article><p class="lead">Belgian chemical producer Umicore this week opened Europe's first battery cathode active materials gigafactory, a move that may start to ease fears about Europe's reliance on Asia for battery chemicals but still leaves a long way to go before full supply chain resilience is in sight.</p><p>At the site of the factory in Nysa, Poland, Umicore's chief executive Mathias Miedreich on Wednesday heralded the beginning of a new industry in Europe. "Our gigafactory is of great significance for the electric transition in Europe and the mobility transformation of our customers," he said. "Electrification of mobility has started, the train has left the station and it will not stop. Our factory in Nysa is a very important building block towards a European supply chain. It is an important piece of geopolitical securitisation."</p><p>Since the founding of the European Battery Alliance five years ago, there have been a succession of announcements in Europe about battery gigafactories. So far, announced battery gigafactory capacities in Europe are about 522GWh by 2025, according to data collected by <i>Argus</i>, but not a single mass-scale cathode-active material plant has opened until now. <i>Argus</i> expects European electric vehicle (EV) sales to increase to 8.67mn by 2030, a rise from just 2.26mn in 2021.</p><p>Nysa hopes to plug some of that gap. Umicore expects the factory to scale up to about 200GWh by 2030, as part of an overall 400GWh cathode-active materials footprint, providing enough materials for 6mn EVs globally. The plant will produce high-nickel, high-manganese and, eventually, solid state battery cathodes.</p><p>There are others on the way. BASF, the European chemical giant, has two plants under construction in Europe. It broke ground on a plant in Schwarzheide, Germany, in late-2020 and plans to open later this year, expanding by 2024. Another plant in Harjavalta, Finland, is expected to fully open in 2023. In total, both will provide enough cathode-active materials for 400,000 vehicles.</p><h2>Energy storage critical to transition</h2><p class="lead">Much of the interest around gigafactories and the surrounding supply chains has been around EVs, but cathode-active materials will also play a role in energy storage, an industry necessary to energy transition. While vehicles are low-hanging fruit, turning homes and businesses away from fossil fuel energy will need battery technology.</p><p>"Now if you look into the potential of power shortages, you would like to have a battery in your house," Miedreich said in response to whether Umicore cathodes from Nysa could be used in energy storage. "Today when you want to put a battery into your house, you pay €1,000/kWh. For an EV with a capacity of 60kWh, you have a storage battery already in your garage."</p><p>Umicore is currently working with Automotive Cells Company, a joint venture between Stellantis, TotalEnergies/Saft and Mercedes-Benz, all of which have indicated a need to pivot towards energy storage applications in future.</p><h2>Power supply will be key</h2><p class="lead">Nysa, like many other projects in the battery world, has tried to stick with key buzzwords in business like sustainability, carbon neutrality and net-zero. While entirely appropriate for a project looking to aid the transition away from fossil fuels, recent energy price spikes in Europe have put a spotlight on the viability of these philosophies. </p><p>Umicore will power the Nysa gigafactory with 100pc renewable wind energy from Pągów, Opole province, located 80km from Nysa. In July it signed a long-term Power Purchase Agreement with French energy provider Engie.</p><p>"Our plant will at all times be supplied with renewable electricity, evidenced through the issuance of guarantees of origin," a Umicore spokesperson said. "In cases of low wind production, for example, the plant will be supplied with renewable electricity from different sources under a different supply contract."</p><p>Miedreich was also upbeat on the power situation in Europe. "I believe the current energy crisis will be a catalyst for this change, just as Covid was for digitalisation," he said. "My conviction is the current spike in energy costs is short-term, over the next year or so. Renewable energy is freedom energy."</p><p>While Umicore may be covered, the impact that energy costs are having on other parts of the supply chain — including downstream aluminium producers essential to car production — is likely to be large. Between October 2021-June 2022, Europe shuttered 50pc of its primary aluminium production (1.1mn t), according to industry body European Aluminium.</p><p>Energy costs are not the only problem for Umicore's target market. Semi-conductor shortages have played a key role in limiting European passenger car sales. Overall registrations were down by 11.9pc in January-August this year, according to the European Automobile Manufacturers Association.</p><p>The pace of EV sales growth in the EU has also stagnated this year. In the second quarter, overall battery EV registrations were up by 11.1pc against the same period of April-June 2021 to 233,413. Last year, the growth rate in the second quarter was 231.6pc against the second quarter of 2020. The road to energy transition in Europe is increasingly coming up against speed bumps, but Umicore's Nysa facility is well placed to benefit once the road opens again.</p><p class="bylines">By Thomas Kavanagh</p></article>
