Joe Coletti 00:04
Welcome to Powering Sustainable Ideas, a new podcast series from RBC Capital Markets, where we interview the leaders and companies powering the sustainable future. In this episode, you'll hear a conversation that took place at RBC’s Global Energy Transition Conference in London this past June.
Joe Coletti 00:20
The past year has seen the battery value chain shaken by the demise of Northvolt and Britishvolt. How is the market repositioning itself, and can Europe still hope to meet the EU target for electric vehicle take-up?
Joe Coletti 00:31
Paul Betts, Co-Head of European M&A at RBC Capital Markets, was joined by a panel of operators from around the continent to talk to these topics. Including:
Matti Hietanen, Chief Executive Officer of Finnish Minerals Group
Michael Wrotniak, Investment Manager at Orion Resource Partners
Ian Johnston, Chief Executive Officer at Osprey Charging
Javier Espelta, H2 Director, Chief Technology Officer at Grenergy
Joe Coletti 00:57
Now, let’s dive into the conversation.
Paul Betts 01:00
Previously, our conference has been focused on the battery value chain and there's a reason for that. We mapped out each of the sub verticals which make up the energy transition sector. And what became obvious very quickly was that the battery value chain was the most capital intensive of the lot. Northvolt, being the leading example, managed to raise a whopping $13.8 billion of over 14 funding rounds. But obviously their hopes and fears came crashing down at the beginning of this year, where they missed production targets, and unfortunately, BMW canceled a $2 billion contract, and they ended up having to file for bankruptcy. And they weren't the only ones to suffer given where the market was moving. Britishvolt battled to secure off-take contracts, and as a result, also filed for bankruptcy end of last year. Our next energy, another LFP battery manufacturer in Michigan, unfortunately, also no longer. Solid state energy and lights in California also no longer. So a trail of destruction, unfortunately. But with me today, a panel of renowned industry experts, which can hopefully provide us with some much needed inspiration, all operating across the very wide ranging battery value chain. So I'll start off with Mattie, CEO of the Finnish minerals Group. Matti, if you can just introduce yourself and your organization and what you're doing in Finland, investing all the way from upstream battery metals down to battery recycling.
Matti Hietanen 02:17
Yeah, sure. Thanks, Paul. We are government-owned holding and development company with the target to build not only the battery value chain in Finland, but also to develop Finnish mining industry. We have all of these key battery raw materials in our mining portfolio. So currently we have three mining assets or projects where we are involved. And obviously the first one is Terra Firma, our subsidiary, that is the biggest nickel producer, nickel mine in Europe, producing, I think, like, 70% of the nickel that is that is mined in in Europe. On top of the mining operations, we have invested in the battery chemicals production in Terra Firma they produce, nowadays, nickel sulfate and cobalt sulfate to be used in the battery value. Terra Firma also is now ramping up uranium production. So, yellow cake production, and will be the only uranium mine in in Europe. And now, together with our partner, cPanel, we are building lithium mine and lithium refinery in Finland. So we will be the first, or our project caliber will be the first lithium producer in Europe. The target is to produce 15,000 tons of lithium hydroxide annually. And then, on the mining side, we also have a development project called Sokli, which is a very large phosphate and real elements project that we fully own and that we are taking forward. We are also planning to build downstream value chain on top of this, so that there will be beacon production, gam production and anode production, and hopefully also battery cells production.
Paul Betts 03:35
Great. Thank you, Matti. Given what's happened over the last 12 months, how are OEMs reacting to the dynamic where they're going to get their batteries from? And how is that going to play into what you guys are doing?
Matti Heitanen 03:44
Well, I think that it's fair to confess that the market is now more challenging than what it was, for example, two years ago. There are many reasons for that. I strongly believe that the electrification of the mobility will continue, and there is no doubt about that as such. But obviously the growth is little bit smaller than what was forecasted. But then, on top of that, obviously, for example, when you when we talk about nickel which is the product that we are now following most closely, obviously, the increase of the production in Indonesia is impacting the market quite heavily. But then to your question about this, for example, impacts of Northvolt, I would say that those are still quite limited, at least from our perspective. Obviously some of the financiers might be a little bit more careful. The thing is that obviously the value chain as such is not materializing so fast as was expected. And that basically means that, for example, from our perspective, many of the customers still are outside of Europe, which is not perhaps optimal situation.
Paul Betts 04:34
Excellent, great. Well, obviously a number of challenges with regards to batteries being used in mobility, but Javier, maybe I'll turn to you next. I think stationary storage, safe to say, is in a very different space, some strong tailwinds, a huge demand and need for stationary storage.
Javier Espelta 04:46
Yeah. We are Grenergy. We are a developer, an IPP company. We are a specialist on solar and energy storage, larger scale. We are operating in 12 energy markets, three main platforms, North American platform, operating in COT and southeast European platform, operating mainly in Spain, also in Germany, UK, Poland, Italy and Romania. But our core business is centralized in Chile. Our flagship projects will be in Chile and centralized in Chile. The most important project is oasis of Atacama, which is essentially a cluster of seven projects located in the path of Chile. This is a good news, because we are going to charge the battery with lower prices. And this is very good for the revenue model. And this project is with a total two gigabytes of power and 12 gigawatt hours of capacity, which is huge, could be the biggest in Americas, and the top three, top four worldwide in capacity. And we are really proud of it. We as well enter in Europe, taking the experience we got in Chile and especially in Spain, with a hybrid project in the same configuration, and saying, you know, technical configuration, storage plus solar. This project is located in the central part of Spain, and we are going to approach the markets, the only markets we have right now available. But the operation will be different than the operation we already are doing in Chile, because the capacity market is not the main street. Will be an upside, and the kind of the markets we are going to operate are going to be a little bit different. And just to highlight another one project is the first standalone project we are already launched in our latest Capital Markets Day, three weeks ago here in London, is a part of the pipeline of projects standalone all of our spin-off green box. This project is called Oviedo, is going to be located in the north part of Spain. And our purpose is to create kind of a technological benchmark for Spain across Europe. We hope so by installing the latest technology, the latest state of our optimizer, and trying to add additional layers to the revenue model.
Paul Betts 06:32
Safe to say, I think a lot of the battery manufacturers that still remain today, especially in the Western World actually moving away from manufacturing batteries using EVs and trying to pivot towards stationary storage. What are the key factors that make the deliverability of stationary storage more successful?
Javier Espelta 06:47
Good question. More diversity in the off taker loan cycle to secure if you are going for batteries for mobility, maybe you have to go for loan cycles to secure the off taker. Right now, in stationary, you have more diversity of off takers. You can split the battery in order to set different agreements, and you can do a lot of optionalities in order to secure the off taker. This is one advantage, in my opinion, the other one is that, we have a consolidated markets in which we can extract revenue from that. You have Metro markets. We have capacity markets. We have balancing market, ancillary services, and the new kind of trend of stability markets and flexibility markets. In all those energy markets, more advanced systems, we have this possibility. So this is a consolidation of the revenue we can get from energy storage. And as well, we have to think of energy storage as a strategic asset that has to be connected in a specific size in the electrical grids, could be in transmission, could be in distribution. Those factors, or those key points, in my opinion, will be the most important. Just talking about regulation, it's been improved in the sense that we have to wait less in order to take our project to the market, take our project to the interconnection.
Paul Betts 07:48
Maybe that's a nice segue. Mike, obviously, an investor, investing across the battery value chain, looking at both mobility and storage and batteries which flow into those two spaces and also further downstream on the industrial front as well. Maybe, can you start by giving us an overview of the types of things you look to invest in.
Michael Wrotniak 08:04
Yeah, absolutely. Thanks, Paul. So I work for a company called Orion Resource Partners. We are a private equity fund that is exclusive to the metals and mining space. Our real expertise is on the upstream, although, inherently, all of these things are very interconnected within this supply chain that we're talking about here. We've made investments across the across the commodity scope. We're in tin, lithium, vanadium, high purity manganese. So we like to get quite niche when we can. It's been great. I think there's certainly been some headwinds in the industry as of late, four or five years ago, when the energy transition became, for lack of a better term, a bit more mainstream, there were some really great projections that people are talking about and commitments that governments were putting out to the public, which I think most people in this room would agree, were a bit ambitious, and so I think the more mainstream investor base, let's call it, is now coming to grips with the fact that this is really a transition. No pun intended. We're not flipping a switch here. This is going to be, not a slow burn, but a bit slower than I think many people would like.
Paul Betts 09:02
Can you walk us through maybe just some of the lessons that you've learned investing in the sector over the last two years?
Michael Wrotniak 09:07
Yeah, absolutely. So I think this is probably, no surprise, but commodity price is king. I think if you call that correctly, everything else tends to fall into place. You know, capital will follow if you need it, things of that nature. But maybe something that is a bit overlooked, in my opinion, is the people. And really the most successful investments that Orion has made has come on the back of backing very competent, very successful management teams. So I know AI robotics, all this stuff is a very big thematic throughout this industry. But, you know, there's rocks involved, there's technology involved. But I think a lot of times in the investor base, forgets the people. When you have a group of girls and guys that are good at what they do, they know the asset, they know the jurisdiction, I think that makes all the difference. And something that we've certainly, without naming names, have had some issues with in the past, and as an investor management team, competency plays a really big part of our due diligence process.
Paul Betts 10:00
Great. Thanks, Mike. Moving to you, Ian, obviously, EV charging is probably one of the most critical components of the battery value chain within the UK.
Ian Johnston 10:09
Paul, thank you. So Osprey is one of the UK's largest networks of public rapid charging infrastructure. So these are dedicated charging locations with a dedicated high voltage grid connection, typically around two megawatts, that will then serve a number of charging bays that will provide between 50 and 300 kilowatts of charge to your vehicle. The business was bought by Investec’s power infrastructure team back in 2018. At that point, there were one and a half people and six charge points. Over that time, we've grown now to be the UK’s third largest, with as of today, 1,400 charge points across the UK as a nationwide network. Today, to build that network, we spent around £130 million in building and operating the infrastructure, and we have leases and projects secured to take us to 2,000 charge points by next December.
Paul Betts 10:53
Excellent, great. For those of us that are thinking about potentially buying an EV, can you maybe just give us a bit of color in terms of how things have changed over the last years, and how you see things changing.
Ian Johnston 11:03
We're in a very different world now to where we were three years ago. There's been a phenomenal rollout of infrastructure. I think the first point in terms of those people not driving EVs to think about is, certainly in the UK, 65% of people have a private driveway. So if you have a private driveway, unless you drive more than 350 miles every day, you can switch to an EV tomorrow, and it's effortless. For the people who are doing very high mileage, for the business drivers, or for those who live in apartments or in terraced housing, that's where they needed there to be a reliable nationwide public charging network. We've now got over 80,000 charge points across the UK. So the provision of charging today, which has all been funded by private investment, is phenomenal. We've overtaken many of the major and larger European markets. So the provision of charging, in terms of volume, is keeping pace with the transition. The challenge that's left to fix is about the fact that the provision of charging is not geographically evenly distributed or by sector. The public sector, which is so important in terms of getting charging into towns and cities, has been slowed by a quite messy local authority procurement process, which is being unpicked at the moment. But in terms of the motorway network, the strategic road network, there's now more charging than people require today, and actually, the rhetoric has now turned to the utilization of the infrastructure that's there, as opposed to a question of, when will the utilization come. A lot of the focus now is not on the old fashioned issues of reliability and the rollout of the infrastructure. It's, How do we make it so easy that the customer doesn't even need to think, so you start to take away the need to even educate them on the technical process.
Paul Betts 12:31
Matti, maybe going back to you for a second, further upstream. We've seen a very volatile commodity pricing environment over the last couple of years. Can you sort of walk us through your outlook for both nickel and lithium pricing, and how that could potentially impact the cost of a battery and the cost of an EV.
Matti Heitanen 12:47
The market is quite difficult, as said, and it is not only about the, let's say, for example, LME price as such, but also the premiums that are paid for different products and on the discounts that are given so that how those evolve. One thing that we need to keep in mind here is that the production, that is sustainable from an environmental perspective, is valued. We already today receive a sustainability premium in some of our agreements because of the lowest CO₂ footprint in the whole market. So we see that that will continue, and then also reliable supply chain is something that is more and more important as well, because most of the asset, most of the production, comes from third countries and then countries like Indonesia. So there are question marks on how reliable that that is if there are any geopolitical crisis, for example, because most of the supply is controlled by the Chinese. With regard of lithium, I think that that is obviously much more tied to the battery market and the development of that and as we all know here, there is a quite big shift in battery market currently from NMC to LFP. And as I said, we have also phosphate project. So we have a kind of like an insurance there, so no worries, but obviously lithium is needed for LFP as well. So, lithium should be fine in that respect. But, let's say, narrowness of the end market probably makes lithium even more volatile than some of these larger metals.
Paul Betts 13:58
Yeah, and I think obviously commodity prices have pulled back somewhat over the last 12 months, but there was a period where they were rallying quite significantly. And I think there was a lot of concern from the OEMs as to how to pass those commodity price increases on to end users, potentially making the car unaffordable for the end user. And then there was some talk about potentially making smaller batteries, which cost less, and making the car affordable for the end user. But obviously having a smaller battery, you need to recharge more frequently, and you need more charging infrastructure. So is this something, Ian, that you're seeing happening in practice?
Ian Johnston 14:29
Yeah, for sure. I mean, we need to clearly stay ahead of where the OEMs and the technology is going to go, so that we know we're installing the right charging infrastructure. I think we see it predominantly moving towards smaller batteries. Again, a lot of the cost for the OEMs is in the cooling technology that allows fast charging without battery degradation. So we anticipate there being smaller batteries over time, but then there will always be the halo products with the mega range and the mega charging speeds that will sit in the higher end luxury vehicles. So we do see the mass market being comprised of primarily smaller batteries over time to be able to deliver that cheaper price point to get the volume of sales for sure. We're not seeing the growth in the battery size or the capacity or the range of what's been sold. What we are seeing is that this time last year, there were two EVs on the market in the UK, less than £30,000. Today, there's 32. Again, a lot of that has been affected by the Chinese models coming into the UK. But again, you are you're seeing a move towards cheaper, more affordable vehicles to hit those volume targets, and they do have clearly less expense of the battery set up as well.
Paul Betts 15:22
We've spoken about LFP batteries, NMC batteries, as they're used for mobility, but what sort of battery metal chemistries are used in stationary storage, and are there any potential bottlenecks on that side of the value chain that are impacting your business?
Javier Espelta 15:35
These lithium ion batteries, LFP batteries, have been evolving so much so the trends in technology of evolution of these LFP batteries are more high density, more ampere hours per cell, and less footprint for the container. We are seeing that soliline batteries, as I was saying, could be an alternative. This is because maybe could be more universal the raw materials, could be more accessible to factories in different countries. Instead of in Asia, Asia has great dominance of the lithium ion batteries manufacturing industry. And we are seeing as well, flow batteries. But, capex, OPEX, and technicalities maybe are a little bit more complex. We are seeing sulfur, sodium batteries. We are seeing, potassium, aluminum ion batteries. But lithium batteries will be the option for this decade, we are pretty sure about that. Storage could be a good option to have the same mechanisms in different countries, maybe thinking not always electrochemistry, but chemical storage, thermal storage, you know, a lot of portfolio of technologies, I will say.
Paul Betts 16:30
Excellent, good. You operate across a number of different countries. Just very briefly, do you notice any difference in terms of the support you're receiving from different governments?
Javier Espelta 16:37
Yeah, excellent question. I think is totally dependent on the country. I will say the most important incentive for batteries, in my opinion, is the capacity market. If you have capacity market available, for instance, in Chile, in the UK, in Poland, and you know, maybe, in case, in California, kind of capacity market, you are going to have the foundation to have a project bankable. This is the most important thing.
Paul Betts 16:57
And be good to understand what the UK is doing, Ian. What are you seeing? Are you getting the support you need from the UK Government?
Ian Johnston 17:03
The current government, in our bubble of our sector, are doing a really good job. I think the previous government was actively and publicly against EV adoption. They pushed the ban back on the set of diesel and petrol to 2035 and they had a number of policies that were trying to protect the driver and to not force them into the transition. The Labor Government has not only brought the ban forward to 2030 which gives us a lot of certainty for investment fundraising, but critically, they're also taking out the barriers, which are preventing us from rolling out quick enough, and driving utilization to the site. So we're very pleased with the work so far. And there are still more barriers. There's more things we need them to move. So that's what we need from them. We don't need financial input. Every pound that's been spent on public rapid charging infrastructure has been private money. We're not we're not asking financial support. We're asking for policies that allow us to do business properly, and we seem to have a team in the government that are that are helping us in that way, so far.
Paul Betts 17:47
Matti, just quickly – China, I know that you've had a number of approaches from Chinese partners looking to partner with you in Finland in the past. What role do you see China playing, and do you think the US and Europe will be more receptive to partnering with Chinese companies?
Matti Heitanen 18:01
We want to partner with the companies who are already in the business, who have the technology, who are the clients, and so forth. And there, the kind of like a reality is that, for example, when you think about precursor or cataract material that it is mostly Chinese companies that are there. The willingness of, for example, European players to invest is quite low. We had a project, for example, with Johnson Matthey. Earlier, they sold their whole battery segment during that project. Though that is a good example it is a little bit tricky to push forward these European partnerships. It is better to have Chinese investments in Europe so that we can utilize the technology that they have, we can utilize the local or good cost competitiveness that they have, and then if there are any geopolitical crisis, for example, then it's better to have that production here than to have it in China, for example, because then, it's very, even in that case, it's difficult to change the location of the factories anymore. And then obviously those situations are then handled under like a European sales agreement and the European legislation. So, that is definitely better position.
Paul Betts 18:57
Maybe, just finishing off, we got a minute to go. Mike, you're an American. Can you share any insights in terms of where you think the US is going with Trump now in power? Are we going to transition to EVs, or is it diesel for life?
Michael Wrotniak 19:06
I think you're going to see a lot of countries, lot of jurisdictions, saying, well, shoot, I don't know if I can rely on my historic trade partners anymore. I need to go out and I need to do this myself. Now, you can look at that from a few different perspectives. You have the upstream where we're very involved in and you see the people like the DFC ExIm from the US and other ECAs throughout the world really ramping up their activity internationally to secure that off take, but then you have to go and do something with that off take, right? You can't just have lithium hydroxide and put it in a warehouse. Need to do something with it. And so I think what you're going to see, particularly in the US, is a lot of onshoring of some of these midstream processors. I think you're going to see government money being thrown at it very cheaply to do that. So I think the real thematic for me in this industry that, you know, is more prevalent than I've ever seen it is the geopolitical sort of interface and how important government funding is going to become.
Paul Betts 19:53
Thank you, very fruitful discussion. Thank you to you all. Hopefully things are onwards and upwards from here. And appreciate you guys coming to join us today.
Joe Coletti 20:02
Thanks again for listening to Powering Sustainable Ideas, brought to you by RBC Capital Markets. Please remember to subscribe to get more great content and be alerted about future episodes. This episode was recorded on June 26, 2025. If you'd like to learn more or continue the conversation, please visit rbccm.com/energytransition.
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