By 2025, the global demand for cell manufacturing is expected to increase to more than 1000 GWh from current 280 GWh, thereby increasing demand for graphite anode material. With current manufacturing capacity of 2500 tonnes per year, Epsilon Advanced Material, which recently received an initial order for its anode precursor material from top two anode makers in Japan & China - is all set to foray into a market that is dominated by China. Epsilon Advanced Material, a subsidiary of Epsilon Carbon, claims to be the only company in the world to have a full backward integration - from raw coal tar to an anode maker. Epsilon is already in advanced stages of qualification with cell companies coming into India - encouraged by the government's Production Linked Incentive (PLI) scheme for Advanced Cell Chemistry (ACC) battery. In this interview with Rakesh Rao, Vikram Handa, Managing Director, Epsilon Carbon, highlights on the potential of lithium-ion battery market and growth opportunities for the company.
How is Epsilon Advanced Material serving the battery manufacturing sector?
Epsilon Advanced Material is a leading manufacturer of advanced cell chemistry materials into fast-growing lithium-ion batteries (LiB) material space. We have currently commissioned our manufacturing unit with a capacity of 2500 tons per year of anode precursor material along with pilot facilities for further processing to synthetic graphite.
Globally, we are the only company that has a full backward integration from raw coal tar to an Anode maker (in LiB supply chain). We have recently entered into MoU with Finland based graphite miner to convert its natural graphite flakes to spherical purified graphite to be used as anode material.
Currently, we are supplying to anode makers based out of China, Japan and Europe and we are already in advanced stages of qualification with cell companies coming to India like Samsung, LG, Panasonic, CATL, SK Innovation. With all these, we look forward to achieving turnover of Rs 3,000 crore by 2025.
Are you, at present, focusing only on the global market (exports)? Who are your leading customers?
Currently, China controls over 70% of global natural graphite supply and over 85% of synthetic graphite supply. Since ecosystem for cell manufacturing in India is yet to develop, Epsilon would continue to be 100% exports-oriented unit. Epsilon has received an initial order for its anode precursor material from two top anode makers based in Japan and China.
Over next 2 years, our customers would be anode makers like Kaijin, Zichen, BTR, Hitachi Chem. We also see Europe and US being attractive markets since 250+ GWh of capacity is being built and they are looking for sustainable sourcing solutions.
What is your current capacity? Why the need to scale up capacity to 35,000 MT by 2025? What kind of investments are you looking for capacity expansion?
With current manufacturing capacity of 2500 tons per year of our anode precursor material has been qualified anode makers. By 2025, the expected global demand for cell manufacturing is expected to increase to more than 1000 GWh from current demand of 280 GWh, thereby increasing demand for graphite anode material.
With 4-fold increase in global demand over next 4 years, we plan to further ramp up our capacity to 15000 MT in 2022 and then eventually have a capacity of 37,000 TPA by 2025 with total investment of Rs 800 to 1,000 crore.
Could you please explain the importance of graphite anodes for cell manufacturers and electrical vehicle industry?
The high growth of EVs is expected to drive dominance of lithium-ion batteries wherein graphite anode is 33% of advanced cell materials used. Although lot of research & development is happening on cathode space on various combination with Li-ion; but the anode material continues to be a graphite.
What kind of challenges are you facing at present?
About 65% of the cell cost is attributed to procurement of cathode & anode material. Countries looking at indigenous cell manufacturing capabilities have identified material processing as gaps in EV supply chain. From the EV market growth perspective, globally all countries, except China, have identified similar supply chain challenges and most of the countries have already started looking at options to secure this aspect of value chain.
EU and US are giving very good incentives to encourage local manufacturing and processing of natural resources into battery materials. They are focused on localisation, if they want to attract big investments for Gigafactories.
While India is focused on cell manufacturing with its Production Linked Incentive (PLI) scheme, LiB raw material processing does not fall under any category and is not getting any government incentive. Other than Epsilon no one else in India is putting in a big investment to develop these critical materials.
Advanced Cell Chemistry (ACC) battery has been included in the Production-Link Incentive (PLI) scheme under Aatmanirbhar Bharat initiative. How it will benefit anode material maker like Epsilon?
NITI Aayog has been very proactive by coming out with the PLI scheme for ACC batteries. Supporting the development of the Indian ecosystem will give a boost to this industry which was not moving ahead in the past few years. However, without focus on advanced cell material & related chemical processing industry, we would still be dependent on imports of these material to be part of global growth in lithium-ion cell manufacturing for EVs and energy storage systems.
It would be worth noting here, it takes about 2 years to setup a Giga factory and another 2 years to stabilise it and similar time frames for raw material processing. So, without proper focus, this ecosystem will take more than 5-7 years to develop and, thus, increasing our dependency on China.
What kind of trends are you witnessing in the market? How do you intend to tap these trends?
Electric vehicles are a key technology to reduce air pollution in densely populated areas and a promising option to contribute to energy diversification and greenhouse gas emissions reduction objectives. In India, we have seen a faster adoption of electric vehicles for 2 & 3-wheeler segment compared 4-wheeler segment.
For the next decade, the Li-ion battery is likely to dominate the electric vehicle market and especially for countries, like India, LFP (lithium iron phosphate) batteries are gaining traction. However, availability of battery grade raw material for cell manufacturing will continue to be constraints. Epsilon is right positioned to fill this gap for anode material in Lithium-ion ecosystem.
What are your growth plans for the company?
Our long-term vision is to reach a scale of 1 lakh MT synthetic anode volume and 25,000 MT of natural graphite. With an overall investment of more than Rs 2,000 crore, it will give us top line of Rs 7,000 crores by 2030. With all this, we would still be able to cater only about 5% of the global market demand but should be able to support India’s domestic demand.