Umicore and PowerCo, VWs new battery company, have agreed a joint venture (JV) for precursor and cathode materials production in Europe. By the end of the decade, the JV plans to produce materials for 160GWh cell capacity per year, which equates to approximately 2.2 million fully electric vehicles.

The agreement centres around the production of precursor and cathode materials in Europe, thereby localising some of the most strategically important battery input materials within the lithium-ion battery supply chain. Umicore’s refining services are set to be expanded over time to include innovative new battery recycling technologies currently being developed.

The JV will invest €3 billion (US$2.9Bn) in producing and refining battery materials to supply PowerCo’s European battery cell factories. Production is set to start in 2025 to supply PowerCo’s Salzgitter factory, reaching an annual capacity of 40GWh in 2026. Leveraging Umicore’s IP and upstream expertise, PowerCo stands to secure proven production capabilities and a unified European cell strategy.

Project Blue believes that the JV achieves something that has proved difficult to achieve in recent deals – both partners are able to secure a major, long-term supply chain partner while diversifying risk and establishing a European precursor to cathode materials to the battery-to-electric vehicle supply chain.