BASF picks German state of Brandenburg as battery materials production site

[February 12, 2020]   By Ludwig Burger

FRANKFURT (Reuters) - Chemicals giant BASF <BASFn.DE> on Wednesday picked a site in the eastern German state of Brandenburg for its second European battery materials factory, part of a one million euro investment plan to benefit from a growing electric vehicle market.

The chemical company BASF building in Levallois-Perret, near Paris, France, is seen at sunset, November 29, 2018. REUTERS/Christian Hartmann/File Photo

The decision, which was widely expected, gives another boost to the economically weaker former communist east of the country after electric vehicle pioneer Tesla <TSLA.O> in November laid out plans for its first European factory and design center near Berlin.

The site, located in the town of Schwarzheide, some 120 km (75 miles) south of Berlin, will draw on feedstock from another BASF factory in Harjavalta, Finland, close to a nickel and cobalt refinery of raw materials partner Norilsk Nickel. <GMKN.MM>

"With these investments in Finland and Germany, BASF will be the first CAM (cathode active materials) supplier with local production capacities in today’s three major markets – Asia, the U.S. and Europe," the company said in a statement.

The two factories will be able to prove enough cathode materials for 400,000 fully electric vehicles per year, it added.

BASF, which announced plans for the Harjavalta site in 2018, has previously put the combined investment for both projects at 400 million euros ($436.48 million).

A spokeswoman on Wednesday would not comment on the size of each project.

The European Commission on Dec. 9 approved 3.2 billion euros ($3.53 billion) of state aid from seven European Union countries for research and innovation in battery technology.

Germany's economy minister said at the time that companies that would benefit from this included BASF, BMW <BMWG.DE>, Opel <PEUP.PA>, Umicore <UMI.BR> and Varta <VAR1.DE>.

Liberum analysts have estimated that cathode materials in a 50 KWh car battery will cost about $2,500, making it among the most costly parts of an electric vehicle.

BASF has said it expects the global market for cathode materials to be worth between 25 billion and 30 billion euros by 2025, boosted by demand for electric and hybrid vehicles.

BASF is competing with Europe's Umicore and Johnson Matthey <JMAT.L> as well as with a range of Chinese suppliers including Beijing Easpring <300073.SZ> and Ningbo Shanshan <600884.SS>.

(Additional reporting by Thomas Seythal and Patricia Weiss; Editing by Madeline Chambers, Kirsten Donovan)

[© 2020 Thomson Reuters. All rights reserved.]

Copyright 2020 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.