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16 February 2022

Britishvolt takes Glencore cash, in third deal of like minds

Would-be UK battery maker, Britishvolt has barely completed one round of £1.7 billion of funding, and it has announced what it calls an anchor investor in the form of Swiss-UK mining and minerals monster Glencore, one of Europe’s largest companies. This is the third deal it has done with Glencore, this time for a £40 million slice of its series C, £200 million, funding round.

This comes a week or so after the two partnered on the recycling of lithium ion batteries. The UK has no major lithium ion cycling business as yet, and it allowed Glencore to rejuvenate an ailing subsidiary in the UK.

Britishvolt has been instrumental in ensuring the UK had some presence in the lithium ion battery market, and began construction on its battery Gigafactory last September. It was only in August that Britishvolt announced Glencore as its Cobalt supplier, entering into a long-term strategic partnership for the supply of responsibly sourced cobalt. The deal was said at the time to significantly “de-risk” its business. Glencore is also a global leading in the supply of metals such as zinc and copper.

It now looks like Glencore is only lending the cobalt to Britishvolt, before its subsidiary Britannia Refined Metals uses the contract to get back into recycling – and retrieve the cobalt, and of course the lithium and once again supply it back to Britishvolt and others in the battery supply chain.

The recycling plant will start from mid-2023 and be Glencore and Britishvolt’s first battery recycling facility in the UK with an expected processing capacity of a 10,000 tons a year and it will process all Britishvolt’s battery manufacturing scrap from its Gigafactory in Blyth, Northumberland.

In January the UK government used an estimated £100 million from its Automotive Transformation Fund to stimulate investment for Britishvolt – to get its first Gigafactory built. This led to a financial partnership with Tritax, which describes itself as a logistics real-estate fund, which handles sales and lease back of properties to companies like Sainsbury and Teslco to two leading UK supermarket chains, and retailers Marks & Spencer, Next and Morrisons, was well as DHL and Rolls Royce. The other funding partner was abrdn, one of the biggest asset managers in the UK – and between them they have put in £1.7 billion in private funding to build that first factory up towards 30 GWh by 2030. It looks like the extra £200 million will be working capital for the business.

It may well be the actions of Britishvolt, raising money in the UK, that led to Japanese owned rival Envision AESC to take over Nissan’s battery factory in the UK in 2019 and it has now put in place plans to build this up to 38 GWh by 2030. A first iteration will start at around 11 GWh when it opens in 2024. Envision is jointly owned by Nissan, NEC and one of NEC’s electronics subsidiaries.

If both companies had not made battery commitments, any UK car makers would have had to import batteries for their entire production line – and many factories would likely have left the UK, leading to a loss of 100,000s of jobs.

Even now the two will have to accelerate their plans in order to meet EV demand in the UK, which is already absorbing 24% of all new car sales, and which will eat 100% by the Government cut off date of 2030. The UK at its peak buys about 2.3 million cars a year, but has fallen back to 1.65 million during the pandemic. Rethink Energy calculates that the UK would need more than double this Gigafactory capacity in the UK to serve all the cars sold there, by 2030. But given the state of the UK car industry, many cars are already made entirely outside the country and shipped there, mostly by stronger German, Japanese, French and Italian car makers.

In fact it is likely that Britishvolt will be unable to supply only UK made cars with this amount of battery (30 GWh) and will likely find a market across Europe for much of its output. Right now it has a memorandum of understanding to develop battery technology for UK sports car maker Lotus which needs specialized battery cells. Lotus only builds around 3,000 cars a year (less in the pandemic) but it also supplies engines into many General Motors vehicle brands and a handful of Toyotas, so perhaps it will go on to supply EV drive trains, and Britishvolt could ride in on the back of such deals.

Britishvolt is also said to be talking to Aston Martin about its electric series, although total sales for Aston martin are only between 4,000 and 6,000 luxury cars each year. Two further, as yet unannounced car makers are said to be close to deals with Britishvolt.