PowerCo, the new battery arm of German auto giant, Volkswagen Group, and Umicore, a Belgian circular materials technology firm, have reportedly founded a new joint venture (JV) for the production of cathode and precursor materials in Europe.
As per reports, the JV will supply the European battery cell factories of PowerCo with critical materials.
By the end of 2030, the two firms are targeting an annual production capacity of 160 GWh cell capacity for cathode material and their precursors, which equates to an annual production capacity that is capable of powering around 2.2 million fully electric vehicles.
As per the terms of the long-term partnership between Umicore and PowerCo, the two will collaborate on responsible and sustainable sourcing of raw materials, which is Umicore’s specialization. Moreover, the Belgian firm will also offer refining services to PowerCo.
The two firms aim to incorporate elements of battery recycling and refining in the JV’s scope at a later stage.
Mathias Miedreich, CEO of Umicore, stated that the partnership highlights the firms product as well as process expertise, and stands as a testament to the success of the company’s strategy of establishing sustainable, closed-loop, industrial-scale battery materials value chains in major regions.
Production at the JV is slated to begin in 2025, to supply the Salzgitter factory of PowerCo. It is expected that the JV would reach an annual capacity of 40 GWh by 2026.
The two will control the JV jointly and will share costs, profits, revenues, and investments equally. Both firms are also planning to invest €3 billion ($2.9 billion) towards new materials production capacities.
With the partnership, PowerCo will have a cost-competitive and secure access to Umicore’s sustainably sourced, innovative, and customized high-performance battery materials for its unified cell strategy in the continent.
On the other hand, Umicore will have a secured access, via pay commitments or firm take, to a key part of Europe’s demand for EV cathode materials at assured value creative returns.
However, the deal is still subject to regulatory approval as well as customary closing terms.
Frank Blome, CEO of PowerCo, stated that by developing substantial production capacities, the company will be ready for the projected rise in demand for battery-grade materials from its VW customers in terms of volume and cost-effectiveness.