Johnson Matthey will exit battery materials

JOHNSON MATTHEY (JM) is quitting its battery materials business after concluding the costs are too high and the chance of differentiation in the market too low.

JM has been developing a next generation battery cathode material – called eLNO or enhanced lithium nickel oxide – that the company said would increase the range of electric vehicles. The company built a demonstration plant in the UK to produce materials for qualification, and had started construction of its first commercial plant in Poland that was expected to start commissioning in 2022 and production in 2024. Plans were also under way for a second production plant in Finland.

Faced with increasing competition from large producers in Asia, the company says a detailed review has now concluded that the potential returns from its battery materials business will be too low to justify further investment and it will look at options to sell the business.

In a statement announcing its plans, it said: “Whilst demand for battery materials is accelerating, so is competition from alternative technologies and other manufacturers. Consequently, this is rapidly turning into a high volume, commoditised market. In recent months, as JM has been exploring strategic partnerships, it has also become clear that our capital intensity is too high compared with other more established large-scale, low-cost producers.”

Around 60% of JM’s sales are tied to the catalytic converters used in fossil-fuelled vehicles and demand is expected to seriously decline under the pressure of climate targets and the phasing out of cars with combustion engines. Johnson Matthey’s announcement saw its share price fall by almost 20%.

JM CEO Robert MacLeod said: “This decision will allow us to accelerate our investment and focus on more attractive growth areas, especially where we have leadership positions such as in hydrogen technologies, circularity and the decarbonisation of the chemicals value chain.”

The company has various interests in hydrogen. This includes a 40% market share in the catalysts used to produce hydrogen by reforming fossil fuels, and a low-carbon hydrogen production process that is under development and will be used in the UK’s HyNet CCS cluster that received UK Government backing last month. The process, which couples a gas-heated reformer with an autothermal reformer, won IChemE’s Energy Award in 2020. Johnson Matthey also has interests in decarbonising heavy transport such as trucks and buses through fuel cell technology. In January, it signed a joint development agreement with SFC Energy, which produces hydrogen and direct methanol fuel cells, and agreed to provide its partner membrane electrode assemblies.

The company said its battery materials business employs 430 permanent staff, primarily in the UK, and it has net assets of around £340m (US$457m).