For several decades, as a major source of plant nutrients, phosphate has been widely used to improve soil fertility, thereby helping to increase crop yields. However, with the rapid global popularity of electric vehicles (EVs), the widespread use of phosphates in EV batteries has attracted much more attention.
As an anode material for lithium-ion batteries, lithium iron phosphate (LFP) is favoured for its high safety, stability and cycle life. The ability of LFP to provide stable power output, with benefits including high temperature performance and lower cost, has made it one of the materials of interest in the electric vehicle battery sector.
The phosphate market is expected to grow at a CAGR of 5.3% between 2023 and 2030, with a market size of USD 78.4 billion. In order to meet the growing demand in the phosphate market, companies engaged in the development of phosphate projects in Kazakhstan, Canada, Australia, and Russia are actively increasing their production capacity. Global phosphate production from mines is expected to increase from 63.6 million metric tonnes in 2023 to 69.1 million metric tonnes in 2027, according to the latest U.S. Geological Survey’s phosphate report.
The following three phosphate mining companies, which are producing phosphates that are being used in the LFP battery sector, could see greater growth opportunities on the back of a growing electric vehicle industry.
Arianne Phosphate is advancing its Lac à Paul phosphate project, which is in the development stage in Quebec. The company has entered into a preliminary offtake and sales agreement and the project is fully permitted and ready for construction. It is worth noting that Lac à Paul produces high-purity phosphate with the potential to supply not only the fertiliser market but also the clean energy market.
The company is working on a research programme in partnership with Cégep de Rivière-du-Loup, an educational institute in Québec, with the goal of developing a new type of fertiliser from organic waste and the company’s phosphate concentrate. In October 2023, the partners received a grant of C$727,500 from the Natural Sciences and Engineering Research Council of Canada to carry out further work.
In addition to agriculture, Arianne Phosphate is exploring the possibility of supplying high-quality materials to the energy industry, including for use in hydrogen fuel cells and lithium iron phosphate (LFP) batteries. in mid-2024, the company released favourable results from a pre-feasibility study of a downstream facility that could convert pyrophosphate concentrates from Lac à Paul into battery-grade phosphoric acid for the production of LFP batteries. Highlights of the study include a pre-tax NPV of $4.5 billion, an IRR of 32% and a payback period of 3 years.
Avenira owns the Wonarah phosphate project located in the Northern Territory of Australia. The project is considered to be one of the largest known phosphate deposits in Australia, with two major ore bodies: Arruwurra and the main area. Based on a 15% phosphate cut-off grade, the mine has a measured resource of 64.9 million tonnes at 22.4% phosphate, an indicated resource of 133 million tonnes at 21.1% phosphate and an inferred resource of 352 million tonnes at 21% phosphate.
In addition to the fertiliser industry, Avenira is also looking to supply phosphate materials to the LFP battery market. Last year, the company released a scoping study for an LFP cathode manufacturing project and plans to commence a feasibility study by December 2024. The Wonarah project also has the potential to supply high-grade yellow phosphorus to the agricultural sector, which the company is currently advancing in conjunction with its strategic partner, Sichuan Hebang Biotech Co.
Centrex Metals, through its wholly owned subsidiary Agriflex, owns the Ardmore phosphate mine in Queensland, Australia. The mine has a JORC compliant Mineral Reserve of 10.1 million tonnes at 30.2% phosphorus pentoxide contained in the existing Mineral Resource of 16.2 million tonnes. During its half year to 31 December 2023, the Ardmore mine produced 66,035 tonnes of phosphate concentrate.
During the last year, Centrex entered into a number of significant offtake and co-operation agreements, including binding offtake agreements with Ameropa and Ballance Agri-Nutrients in Australia for the purchase of phosphate from Ardmore. The company has also entered into Memoranda of Understanding with Agriflex and Neutrog Australia to develop new organic and biofertiliser products.
The company is undertaking a Phase 1.5 expansion of the Ardmore phosphate mine, which is expected to be completed by the end of this year, and the expanded Ardmore mine is expected to produce 625,000 tonnes per annum, making it the largest asset contributing to cash flow.
Given the vast opportunities in the lithium iron phosphate market, Centrex has signed a memorandum of understanding with Lithium Australia (ASX:LIT) for the potential development of a lithium iron phosphate and lithium manganese iron phosphate cathode materials production plant in Australia.
If you are interested in phosphate mining companies, please pay close attention to First Phosphate (CSE: PHOS) (FSE: KD0). This is the only publicly listed company that is fully dedicated to extracting and purifying phosphate for the production of cathode active material for the Lithium Iron Phosphate (“LFP”) battery industry. LFP batteries operate similarly to other lithium-ion batteries. They have the advantage of being non-toxic, having superior fire safety, longer cycle life and lower cost. The company is the Building Block for a North American LFP Battery Ecosystem, the company holds a total of 1,500+ sq. km of royalty-free land claims in the Saguenay-Lac-St-Jean Region of Quebec, Canada consisting of rare anorthosite igneous phosphate rock that generally yields high purity phosphate material devoid high concentrations of harmful elements.
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