Johnson Matthey PLC agrees deal to build battery materials plant in Finland

() has teamed up with Finland’s state mining company to develop a commercial battery materials plant in the Nordic country.

The chemicals group said it has also secured a long-term supply of raw materials for battery materials production, with agreements clinched with Nornickel for nickel and cobalt and SQM for lithium.

READ: Johnson Matthey to launch review of health business as profits rebound

The FTSE 100 firm, which has been pushing into new markets to balance the decline in its petrol and diesel catalytic converters business as the world transitions to low- and no-emissions vehicles, is making its move into the electric vehicle battery market through its development of a high-performance cathode material called eLNO.

As part of the new partnership with Finnish Minerals Group, where the stated aim is to create an integrated electric vehicle battery value chain, Johnson Matthey said it has begun the front-end engineering design for a plant to be located in Vaasa, on the west coast of Finland, and will break ground later this year.

For what is the UK company’s second eLNO plant, Finland has been chosen because of its “favourable battery materials ecosystem,” and proximity to major European automotive and cell manufacturers.

Finnish Minerals Group, which manages the country’s state’s mining industry shareholdings, will invest in two key areas, Johnson Matthey said. First is the co-development of an integrated solution to treat sodium sulphate, a common manufacturing by-product, providing a sustainable supply chain to conserve natural resources and protect the local environment. It will also invest in pre-treatment technology of nickel and cobalt sulphates to tailor the materials to the requirements of high nickel cathode materials.

The site will only use locally generated renewable energy and the plan is to develop a sustainable heat recovery solution which feeds the local heating system network.

JMAT shares were up 2% to 3,242p by late morning on Monday. 

“Johnson Matthey is making moves to turn itself into an electric vehicle supplier as it makes progress on expanding eLNO production,” said Laura Hoy, analyst at Hargreaves Lansdown. 

“It could only be a matter of time before traditional combustion engines are completely phased out, so Johnson Matthey is in a race against the clock. Right now, eLNO makes up just a fraction of overall revenue, so the sooner the group can scale up commercial production, the better.

“While eLNO has been promising so far, we won’t know whether it will become an integral part of the battery supply chain until it becomes readily available and customers are buying it in force. It will be some time before eLNO will move the needle for Johnson Matthey, but as long as construction remains on-track this year we expect to see evidence that eLNO can be a player in the battery space over the next few years.”