Iron age: Battery-makers turn to most mined metal on Earth

Energy storage and electric vehicle suppliers are turning to batteries rich in iron, Earth's most abundant element by mass, amid concerns over looming shortages, prices and sustainability of other essential energy transition feedstocks.

Lithium-ion batteries relying on iron-based cathodes stormed the market in 2022, meeting 39% of global demand for passenger EV batteries, up from 23% in 2021, according to a recent battery metals report from S&P Global Commodity Insights. Such lithium-iron-phosphate (LFP) batteries will rise to nearly 50% of global demand for EV batteries by 2027, the report estimates.

That ascent comes largely at the expense of batteries heavy in cobalt, a metal that has been linked to accusations of human rights violations in the Democratic Republic of Congo, where it is primarily mined. Although lower in energy density than other lithium-ion variants, LFP batteries address some of the environmental, social and governance risks facing battery makers, including with a chemical makeup that is less prone to fires. But cost is the main driver of the trend, according to battery experts.

"A shift towards LFP is occurring because of continuing pressure to reduce costs," Shannon O'Rourke, CEO of Australia's Future Battery Industries Cooperative Research Centre, said in an email. "Ultimately, it's all about a tradeoff in cost and performance. LFP suits mass-market EV and stationary storage applications, but its lower energy density makes it less suitable for high-end EV and performance applications."

Tesla Inc., which has adopted the chemistry for standard-range EVs and energy storage devices, is among the most bullish industry players on LFP. While high-density nickel-dominant batteries are needed for ultra-long-range vehicles, "the vast majority of heavy lifting for electrification will be iron-based cells," CEO Elon Musk said during the company's March 1 investor day. "There's so much iron, it's insane."

Tesla is purchasing LFP cells from China's Contemporary Amperex Technology Co. Ltd., which is also partnering with Ford Motor Co. on its recently announced $3.5 billion LFP cell plant in Michigan. It is one of several major iron-based battery and materials plants planned in the US over the next few years, harnessing incentives in the Inflation Reduction Act of 2022 and the bipartisan infrastructure law of 2021.

'Global launch' of new lithium-ion approach

Citing US manufacturing incentives and strong US demand for energy storage, Norway-headquartered Freyr Battery is considering an acceleration of its plan to build an LFP battery plant in Coweta County, Ga., announced in November 2022 and estimated to cost more than $2.6 billion.

"We are evaluating multiple options to fast-track the start of production at Giga America targeting start-up in 2025," Tom Jensen, CEO of the European battery upstart, said in an email.

The company, which received funding from industrial giant Koch Industries Inc. as part of its public listing on the New York Stock Exchange in 2021, intends to be the first to scale up a novel semi-solid cell design from licensing partner 24M Technologies Inc. Koch and Freyr jointly invested $70 million into the Cambridge, Mass.-headquartered 24M in October 2021, when they formed a joint venture to explore a US manufacturing site.

Freyr has large cell supply agreements with US energy storage system suppliers Honeywell International Inc. and Powin Energy Corp.

Before its Georgia production advances, Freyr intends to launch its first gigawatt-hour-scale operation in Mo i Rana, Norway, on March 28, where the company plans to make sample cells for customers and validate production process before scaling up in Norway and the US.

The start of production will mark a "major milestone" for Freyr and "the global launch" of the 24M platform at an industrial scale, Jensen said. While the platform is designed to produce other chemistries as well, Freyr is focused on LFP first.

An important part of Freyr's commercialization strategy is a licensing partnership with Advanced Lithium Electrochemistry Co. Ltd.Taiwan-based Advanced Lithium Electrochemistry, also known as Aleees, is a global supplier of LFP cathode materials to energy storage and EV battery companies that is involved in several US manufacturing projects.

"We are eager to support Freyr in bringing more innovation and greater sustainability to the battery industry," Edward Chang, CEO of the LFP specialist, said when the companies announced their agreement in October 2022.

Lithium-ion alternatives

Several energy storage innovators are working to expand iron-based batteries as longer-duration alternatives to all types of lithium-ion technologies.

Form Energy Inc. is on track to break ground "imminently" on a $760 million manufacturing facility at a former West Virginia steel mill for its multiday iron-air batteries, CEO Mateo Jaramillo said in an interview at the CERAWeek by S&P Global conference earlier in March.

Although still pre-commercial, the company's approach attracted utility interest. In January, for instance, Form agreed to deploy systems at two Xcel Energy Inc. coal plants in Minnesota and Coloradoslated for retirement.

Like its lithium-ion counterparts, Form was persuaded by the advantages of iron.

"It's very low cost. It's very abundant. ... It's very safe," Jaramillo said. "For all of these same reasons, iron is being reevaluated in a lot of different ways."

The executive is not concerned about competition for iron from the lithium-ion battery industry, given the massive scale of global iron ore production.

"Whatever the battery industry does, it will be a long time, whether it's automotive-driven or grid storage, before we have any impact on the overall demand environment," Jaramillo said.

"It's just a totally different worry than people would have about, say, cobalt or nickel or even lithium," added Eric Dresselhuys, CEO of ESS Tech Inc., an Oregon-based maker of iron flow battery systems. "I can't say that there will never, ever, ever be an iron shortage, but I don't see that as a constraint for decades."

Dresselhuys is strategic, however, when discussing ESS Tech's own iron supply.

"Now that everybody from Elon Musk and others are saying they're going more and more to iron, we're not giving away our sources," he said.

S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.