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Johnson Matthey to exit battery materials business; increased commoditization, lower returns

Johnson Matthey (JM) has been working to commercialize its eLNO range of high-nickel cathode materials (earlier post), principally for the automotive industry. Following a detailed review and ahead of reaching a number of critical investment milestones, the company has concluded that the potential returns from the Battery Materials business will not be adequate to justify further investment.

JM’s eLNO family of nickel-rich advanced cathode materials enables around 20% greater battery density over today’s typical equivalent battery technology. Applied in a electric two-seater electric formula race car displayed at COP26 (earlier post), the eLNO cathode technology helps the cylindrical 602030 cells in the battery pack to achieve 200 Wh/kg cell energy density for a total 47kWh capacity, and an electrical output of 585 volts.

JM intended to supply eLNO to customers in Europe from two new production facilities. The first facility in Poland is under construction and is to be completed in 2022, for commercial production in 2024. A second eLNO plant is also planned in Finland.

Although demand for battery materials is accelerating, so is competition from alternative technologies and other manufacturers, the company said. Consequently this is rapidly turning into a high-volume, commoditized market, the company explained.

In recent months, as JM has been exploring strategic partnerships, it has also found that its capital-intensity is too high compared with other more established large-scale, low-cost producers.

JM’s Board has therefore decided to pursue the sale of all or parts of this business with the ultimate intention of exiting. The company said that it will move swiftly to determine the best outcome for all stakeholders and intends to make a further announcement as soon as possible.

JM added that it is making good progress in its other growth areas, such as in hydrogen technologies, circularity and the decarbonization of the chemicals value chain—attractive opportunities efforts on which it will now accelerate with greater focus and investment.

While the testing of our eLNO battery materials with customers is going well, the marketplace is rapidly evolving with increasing commoditization and lower returns. We have concluded that we will not achieve the returns necessary to justify further investment.

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 decarbonization of the chemicals value chain.

—Robert MacLeod, Chief Executive

JM has pledged to invest around £1 billion (US$1.34 billion) in the research, development and deployment of clean hydrogen technologies by 2030.

JM’s Battery Materials business consists of 430 permanent employees, of whom the majority are in the UK. The net assets of the business as of 31 October 2021 were approximately £340 million (US$455 million).

Johnson Matthey will announce its first half results—which are in-line with market expectations—on 24 November. The trading outlook for the full year ending 31 March 2022, assuming current precious metal prices and foreign exchange rates, is towards the lower end of market expectations, the company added. This is primarily due to the wide-spread supply-chain shortages affecting the automotive industry and the consequential impact on precious metals prices, together with acute labor shortages in the US that are adversely impacting JM’s Health business (which is subject to strategic review).


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