Himadri Speciality Chemicals will invest ₹4,800 crore over the next 5–6 years in setting up a plant that will produce 2 lakh tonnes of lithium iron phosphate (also known as LFP or lithium ferrophosphate), a key material for making lithium ion batteries used in electric vehicles. This is the first such plant in India.
In the first phase, it will invest ₹1,125 crore in the first phase for a 40,000 tonne per annum plant in Odisha. It intends to complete the project in 27–36 months.
The project will be executed by the step-down, wholly-owned subsidiary, Himadri Future Material Technology.
Lithium iron phosphate is the key cathode material, accounting for 52 per cent of the cost of lithium batteries (LiB) used largely in electric vehicles.
- Also read: Himadri Speciality Chemical looking to capitalise on growth opportunities in the lithium-ion batteries industry
Revenue and Funding
The company intends to fund 70–80 per cent of the investment through internal accruals, as it targets becoming debt-free by repaying ₹230 crore of debt by March.
At full capacity, the company expects to generate revenue of over ₹4,000 crore from the investment. It has already tied up raw material supplies of lithium carbonate from Australia, South America, and Africa and is confident of enough supplies despite growing demand.
At the optimum capacity of 40,000 tonnes, the company would require a carbonate raw material of 10,000 tonnes.
Till domestic battery manufacturing evolves, Himadri will export its entire cathode material production and is in discussion to get approval from eight global battery makers.
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.
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.
Late last year, automobile major Maruti Suzuki announced plans to set up an EV battery plant at Hansalpur in Gujarat. The Suzuki Motor Gujarat Electric Vehicle Battery Manufacturing facility will be set up with an investment of around ₹7,300 crore to manufacture advanced chemistry cell batteries for electric vehicles.