Emerging Industry Needs Rational Escort
Lithium-ion Battery Forum held in Zhangjiagang

The 2012 China (Zhangjiagang) Lithium-ion Battery Key Material Technology and Investment Forum was held on March 7-8. The conference was jointly held by the China National Chemical Information Center and Zhangjiagang Free Trade Zone. A professional audience of more than 200 people from lithium-ion battery, positive and negative electrodes, separator, electrolyte, and other key materials makers, electric vehicle producers and securities and fund companies attended the conference. Speakers included experts and scholars from the Institute of Industrial Economics of the Academy of Social Sciences, China Carbon Industry Association, China Battery Industry Association, the Chinese Academy of Sciences, Yantai Zhuoneng Battery Material Co, Galaxy Resources Ltd, Sentian Chemical and Guotai Huarong. They discussed and exchanged views on topics such as the prospects of the new energy car industry, the key of lithium-ion battery performance, and the problems of overheated investment in the separator, electrolyte, anode and cathode materials industries. Amid brainstorming, many experts and scholars called on a rational development in the lithium-ion battery industry and don’t be too optimistic about potentials in downstream markets such as new energy vehicle sector.

Seize the initiative to create industry leaders: Zhangjiagang’s lithium industrial clusters reflect advantages

The lithium industry in Zhangjiagang started relatively early on the back of the region’s geographic and resource advantages. An industry cluster there has attracted many lithium materials and battery makers as well as inspection and testing equipment manufacturers to set up plants in Zhangjiagang.
Zhajianggang’s lithium-ion battery industry has entered a growth period, with a relatively complete industry value chain ranging from lithium carbonate, lithium-ion battery materials to battery and end products where batteries are used. In 2011, the city’s production capacity for liquid electrolytes in lithium-ion batteries has reached 12 000 t/a, and 1 800 t/a for additives and solvents, 1 500 t/a for electrolyte salt, and 20 million units/a for small power lithium battery. Industry leaders like Huasheng Chemicals, Guotai Huarong, Sentian Chemicals and Galaxy Resources have set up a presence in Zhangjiagang. And because of them, many supporting companies also came to Zhangjiagang, including electrolyte raw materials makers Yayuan Hi-tech, Fute and Hankang Chemicals; electrolyte producers such as Huatian New Energy and Xinyi Chemicals; cathode materials makers Guotai Libode New Material Co and Longyue; battery makers Tenpower, Jiangsu Litian New Energy
Technology Co, DLG Power Battery and Longyue; power management system manufacturers like Jiangsu Soul New Energy Technology; lithium battery charge and discharge equipment maker Jiangsu Jinfan Power Technology Co; pure electric vehicles makers Mudan Automobile, Jiangnan Auto, Youyi Automobile and Jiangsu E-Motors Co.
   In addition to lithium products, EV, and storage equipment, Zhangjiagang will also develop the lithium ore processing, high-performance electrode materials, separator materials, plastic composite membrane materials, automated battery production equipment, power management system, lightweight strong materials for cars and other advanced materials and high-end equipment sectors to improve its lithium power industry chain and enhance competitiveness. The industrial output of Zhangjiagang’s lithium industry is expected to reach RMB35 billion.

Game between energy-saving vehicles and new energy vehicles

China sold 8 159 new energy vehicles in 2011, including 5 579 electric vehicles with state subsidies – or buses serving the public sector – and 2 580 purchased by individuals. China’s total vehicle sales reached 18.5 million units. That means the market for new energy vehicles is still very small.

And there are many problems for the industrialization of China’s new energy vehicle sector.

First, market considerations are not enough for large-scale trial production. China’s new energy vehicle sector is still in the stage of small scale trial production and the sector is still around 10 years behind that in Japan and the US in terms of product maturity degree and reliability. As a result, the tests on many aspects of system integration, such as batteries, are far from enough.
Next, the industry chain for lithium battery and other key components has not yet been formed. That means there are still problems for power batteries in terms of costs, safety and reliability. The energy density of such system still needs to be increased. For hybrid vehicles, China still needs to catch up in fields including efficient internal combustion engines, advanced transmissions, lightweight, and the coupling of power system and electric system. In addition, China still has to rely on imports for certain electrical and electronic control systems and electronic components as well as some key raw materials such as rare earths and extraction technology required for permanent magnet motor. Even against such a backdrop, there is a blind investment boom for new energy vehicles. As a matter of fact, many buses already running in some Chinese cities under demonstration projects are using batteries and electronic control systems that are imported and domestically assembled.
Also, the business model for new energy vehicles is still unclear. There is not a conclusion as to whether an EV will be sold with a battery or without, and on earth which kind of new energy vehicle will become the mainstream for the next 10 years. It is also uncertain to what extent China’s new energy market will be developed by 2020. The uncertainties mainly come from energy supply, market and technology. With improved technology in crude oil exploration and production, the marginal crude oil production will also be changing, which will result in uncertainties in predicting fossil fuel supply. And fuels including CNG, LNG, ethanol and methanol can also be used as alternatives to power vehicles. In addition, it takes time to verify the market applicability of various new energy vehicles.

Still energy saving potential in conventional vehicles

With technology advancement, there is still potential room for energy saving and emission cut in conventional cars. This factor is also increasing uncertainties for new energy vehicles to replace traditional cars. Among main global automakers, the mainstream today is still to use advanced technology to improve vehicle performance and efficiency level.
Next, automakers are making their cars lighter by using high performance materials such as aluminum and plastics. And the higher quality for fuel and lube also helps saving energy. Also, the use of methanol, ethanol and natural gas has eased concerns on oil supplies to some degree.
Today China’s ownership of natural gas-powered vehicles has already reached 1 million units, with relatively good market potential.
China’s auto industry is undergoing a key transformation and with no doubt, new energy car is a strategic direction.
However, no one could accurately forecast when new energy car will become the mainstream in the auto market. At present, while developed nations are investing in the development of pure EVs, hybrid cars and light fuel vehicles as well as alternative fuels, they are not giving up on the R & D on energy saving in traditional vehicles. According to market analysis, the first kind of EV to enter the market should be mild hybrid, and the fate of pure EV is still depending on a range of factors.

The golden time to enter the lithium power industry is already gone.

As laptop, mobile phone, MP3 and digital camera are becoming increasingly popular among consumers, it is inevitable for lithium-ion secondary batteries to replace nickel -metal hydride and nickel cadmium batteries. Global demand for lithium-ion battery is estimated to reach 1.77 billion units in 2012, with sales hitting 20 billion yen. Demand for lithium-ion batteries for vehicle use is set to reach 69.5 million units, with sales of 368.1 billion yen. In 2015, sales may grow to 1.18 trillion yen. Meanwhile, as technologies for solar cell and night energy storage become increasingly mature, such applications of large power batteries will also draw attention. As an extension of small battery, the increasing demand for power batteries is positive to the development of lithium-ion battery raw material makers.
There is already an oversupply for lithium battery materials in today’s market where competition is fierce. With breakthroughs in technology, the price for positive and negative electrodes, separator, lithium hexafluorophosphate and electrolyte and other key materials has entered the downstream channel with declining profit margin. The best time of the industry is gone.
The expansion plans by existing lithium-ion battery materials companies are mainly driven by the development of the electric vehicle and electric bike markets. As a result, for existing lithium-ion battery and material makers, the key issue is to work together with other stakeholders in the industry to promote the market of EV, HEV and electric bikes so that they can seize the development opportunities. Otherwise, slower development in these emerging sectors will leave time for the development of new type batteries for other applications.

For lithium iron phosphate material “stability the priority” High technical threshold, test on stability

The industrialization of the lithium iron phosphate sector mainly happened in China and North America. US company A123 Systems adopts the lithium doping, carbon-coating, ferrous oxalate process Valence adopts iron oxide red process and carbothermal reduction method. The two companies only process products for customers and do not sell products directly. Canadian company Phostech uses a liquid phase to produce the P2 material, which features small nanoparticles and perfect magnification low temperature performance, but it is also very expensive. In 2011, South Korea’s Hanwha Chemical released the nano-lithium iron phosphate using the supercritical hydrothermal method while Taiwan-based Advanced Lithium Electrochemistry Co is using an international licensing to metal oxide eutectic process.
For the processes by lithium iron phosphate makers, see table 1.
A larger number of Chinese companies – more than 200 according some estimates – have invested in the lithium iron phosphate industry though some have already quit. However, only about 30 companies have the capability of large-scale and stable production. It does not require much capital investment but technology that could ensure stable production. In addition, domestic lithium iron phosphate production is constrained by upstream iron supplies. Iron source for 70%-80% of China’s lithium iron phosphate is ferrous oxalate. Though China has rich iron resources, it only has a few companies capable of producing ferrous oxalate stably. This is posing challenges to the stable supply of ferrous oxalate in domestic market.

Table 1  Processes of lithium iron phosphate production

Country    Company    Process
US    A123    Ion doping, carbon-coating, ferrous oxalate process
    Valence    iron oxide red process and carbothermal reduction method
Canada    Phostech    liquid phase    nanometer technology
South Korea    Hanwha Chemical    supercritical hydrothermal method
China    Advanced Lithium Electrochemistry    metal oxide eutectic process
    Formosa Energy & Material Technology Co    iron oxide red process and carbothermal reduction method
    Tianjin STL Energy Technology Co    ferrous sulfate process
    Pulead Technology Industry Co    ferrous sulfate process
    NanoChem Systems (Suzhou)    carbothermal reduction method
    Shenzhen Dynanonic Co    small nanoparticles, with D50 of 700 nm


Energy storage a promising sector

Lithium iron phosphate, as a type of cathode material, is mainly used in power batteries and storage batteries. The development in the new energy vehicle industry over the recent two years was mainly led by the central and local governments, rather than market demand, if any. As a result, the demand growth for power battery has never been triggered. In the power storage field, storage equipment is essential to help connect renewable sources-generated power into power grids. Major state-owned companies including State Grid Corp of China, China Southern Grid Co, China Mobile, China Unicom and China Telecom have started to advance the construction of demonstration projects for lithium-ion battery energy storage projects. The development of this sector will provide a big market for lithium iron phosphate over the next couple of years.

Brake necessary for carbon anode material sector

The anode material sector has been rapidly growing over the past years with actual supply reaching almost 9,000t in 2008 in the domestic market. At present anode materials are still mainly artificial graphite and natural graphite, which account for 85% of total. Major Chinese anode material makers include Shenzhen BTR New Energy Materials, Shanghai Shanshan and Changsha Hairong New Materials Co. Shenzhen BTR has the largest capacity and is an industry standard setter, making it a leader in the domestic industry. Shanghai Shanshan has a capacity of over 2 000t/a while Changsha Hairong also holds 2 000t/a.
The Ministry of Industry and Information and Technology, along with the National Development and Reform Commission, the Ministry of Science and Technology, and the Ministry of Finance, released the 12th Five-Year Plan for the Advanced Materials Industry. China’s total new energy vehicle output will exceed 500 000 units by 2015, according to the Plan. That will translate into the demand for energy-type power battery modules of 15 billion Wh/a, and power-type battery modules of 3 billion Wh/a, battery separators of 100 million m2/a, lithium hexafluorophosphate of 1 000t/a, cathode materials of 10 000t/a and carbon-based anode materials of 4 000t/a. Meanwhile, the Plan calls on the active development of high purity graphite, better quality of graphite anode materials, and quicker development of nuclear grade graphite materials. It also urges the industrialization of graphite and titanium salts as negative electrode materials, with an additional capacity of 20 000t/a.
However, the planned capacity is far dwarfed by actual capacity. According to media reports, in addition to the expansion plans by Shenzhen BTR, Shanghai Shanshan and Changsha Hairong, other foreign companies including Qingdao Anode Kasei Co, which is solely owned by Japan’s Mitsubishi Chemical Corp), Hitachi Chemical, and Kureha Battery Materials, a joint venture between Kureha and Itochu , all plan to build anode material plants in China. The capacity either under construction or being planned by domestic companies is also astonishingly huge. Anode material projects are being built or proposed in Henan, Jiangxi, Jiangsu, Sichuan and Shandong, with combined capacity of more than
100 000t/a – a figure that indicates overheating. Now, the Plan will help place a brake on the anode material sector.

Nanofiber composite separator to fill vacuum in domestic battery separator sector

The separators we use today mainly include single-layer polyolefin-based separators, multi-layer polyolefin-based composite separators, electrolyte membranes and cellulose-ceramic composite membranes.
At present the majority of Chinese separator makers rely on stretch processes but the technology patents are all in the hands of foreign companies. This situation exposed Chinese companies to IPR risks. Also, the process and equipment requirements on multi-layer composite separators are extremely high. Electrolyte membrane is mainly for small batteries while cellulose ceramic composite membrane is Degussa’s patent. Over the past two years, the domestic lithium-ion battery separator industry has attracted lots of investors, but it also faces a big problem – the lack of advanced technology such as pore-forming technology and advanced equipment. The performance and structure of domestically-made separators still far lag behind those backed by foreign technology. And China’s position in the high-end separator field, especially power battery separator, is almost zero.
The Technical Institute of Physics and Chemistry under the Chinese Academy of Sciences began developing nanofiber composite film in 2005, and has started pilot production already. This product is mainly developed for high-end power batteries.
The porosity of this kind of separator can be adjusted in range between 40% and 75%, and it features small resistance and excellent electrochemical performance, as well as long cycle life, good rate performance and safety.
This trial is expected to be completed in the second half of 2012, followed by the development of a demonstration production line. Construction on a demonstration plant is set to begin after 2013 which will feature a complete technology system. Eventually, there will be a production scale of 10 million-30 million m2/a.