Phosphate rock and electric cars

A recent report from CRU shows that LFP growth may require the global purified phosphoric acid industry to double in size. As we continue to see significant growth, LFP batteries are becoming an increasingly important part of the cathode chemistry mix and will play a key role in the global shift towards electric vehicles.

The global shift toward electric vehicles (EVs) is gaining momentum, driven by rapid technological advancements, supportive government policies, and changing consumer perspectives.

Technological progress has substantially increased the energy density of EV batteries, allowing for longer vehicle ranges, and simultaneously reducing the overall cost of purchasing and owning an EV to levels comparable with traditional petrol or diesel vehicles. 

Governments worldwide have incentivized consumers and automakers through subsidies and tax credits, while also passing legislation to phase out traditional internal combustion engines in the long run. The concern of “range anxiety,” where vehicle owners worry about running out of battery power before reaching a charging station, is diminishing due to larger battery capacities and a growing network of public charging infrastructure.

These combined factors are driving significant growth in global battery electric vehicle (BEV) sales, projected to reach 18 million units by 2025, compared to 2.3 million in 2020 – marking an eight-fold increase over five years. By 2045, it is anticipated that 65 million BEVs will be sold annually, constituting over two-thirds of total light-duty vehicle sales worldwide.

The implication of this for phosphate producers in particular, is that if LFP cathodes continue to be produced predominantly in China over the long term, the iron phosphate precursor and phosphate raw materials that are used in their production will continue to be sourced in China as well. This would essentially lock-out phosphate producers outside of China from the LFP industry and prevent them from enjoying the premiums associated with this growing market. However, the emergence of LFP production outside of the country could result in game-changing market growth for purified phosphate suppliers in the rest of the world.

The magnitude of this LFP demand growth globally, and the overall demand for purified phosphoric acid far outstrips current global capacity in the long term.

The key question for phosphate producers is whether LFP cathode supply (and therefore potentially iron phosphate supply) will proliferate geographically over the long term in a similar way to LFP demand.

Igneous phosphate rock is the most effective raw material available to produce purified phosphoric acid. This is a scarce resource that is only available in a few regions in the world. Thus, associated with purified phosphoric global demand growth there will be a need to develop igneous phosphate rock to supply the industry.