India's First Commercial Lithium-Iron Phosphate Cathode Plant To Be Set Up In Odisha

Over the next 5 to 6 years, Himadri Speciality Chemicals plans to invest Rs 4,800 crore to establish a facility in India, the first of its kind, for the production of lithium iron phosphate (LFP), also known as lithium ferrophosphate.

This crucial material is used in the manufacturing of lithium ion batteries, which are integral to electric vehicles. The plant is expected to produce 2 lakh tonnes of LFP.

During the first phase, an investment of Rs 1,125 crore is planned for the construction of a 40,000-tonne per annum plant in Odisha. The project is expected to be completed within a time frame of 27 to 36 months.

The project will be executed by the company's step-down, wholly-owned subsidiary, Himadri Future Material Technology.

The cathode material known as lithium iron phosphate significantly contributes to lithium battery costs, comprising 52 per cent of the total expense. These batteries are predominantly used in electric vehicles.

The company intends to fund 70–80 per cent of the investment through internal accruals, as it targets becoming debt-free by repaying Rs 230 crore of debt by March.

When operating at its maximum capacity, the company anticipates that the investment will yield over Rs 4,000 crore in revenue. They have already secured supplies of lithium carbonate, the raw material, from Australia, South America, and Africa. Despite the increasing demand, they remain confident in the sufficiency of these supplies.

The company would need 10,000 tonnes of carbonate raw material to reach its maximum capacity of 40,000 tonnes.

Until the development of domestic battery manufacturing, Himadri plans to export all of its cathode material production. The company is currently in talks to secure approval from eight international battery manufacturers.

Cathode material demand is expected to increase to 9.4 million tonnes annually by 2030 to meet the required global production of LiB cells.

Himadri is also working on technology to produce anodes, another key component accounting for 15 per cent of the EV battery cost.

Anurag Choudhary, CMD and CEO of Himadri Speciality Chemical Ltd., said China currently dominates lithium cathode manufacturing, accounting for 95 per cent of the market share, and most of the western countries are looking at India to diversify their sourcing under their China Plus One policy, The Hindu Businessline reported.

Subsequently, he said many car manufacturers and existing battery makers are in the initial stage of putting up plants for making batteries in India, though they have to depend entirely on imports for battery materials.

Though the government has announced performance-linked incentives for battery makers, he said such sops are still under active consideration for battery material manufacturers, which is a highly niche segment, and a positive outcome is expected soon.