Northvolt seeks to sell redundant battery materials to raise cash, sources say

By Pratima Desai and Marie Mannes

LONDON/STOCKHOLM (Reuters) - Sweden's Northvolt is trying to sell off its stockpile of battery-making materials, three sources familiar with the matter said on Thursday, as the company tries to shore up its finances after reining in its ambitions.

Seen as Europe's best hope for a homegrown EV battery maker, Northvolt said last month it would cut a fifth of its workforce and slim down its business to reduce costs. That marked a departure from its mission to be an all-in-one shop offering everything from material production and battery making to end-of-life recycling.

It will now focus on large-scale battery cell manufacturing, and its decision to halt production of cathode active materials (CAM) at its gigafactory in Sweden means stocks of raw materials nickel sulphate and lithium hydroxide are now redundant.

The decision has been made to sell the stockpile to raise cash, one of the sources said.

A second source said the raw materials have a relatively short shelf-life, adding urgency to the sale.

The sources declined to be identified because their conversations are private.

A spokesperson for Northvolt said it continues to plan for a vertically integrated battery strategy.

"Ever since we produced our first battery cell at Northvolt Ett in Skelleftea in 2021, we have collaborated with partners who deliver externally produced cathode active material."

"We do not comment on our overall supply chain strategy," the spokesperson added.

A spokesperson on Sept. 24 told Reuters the company had made significant progress in recent weeks in its effort to raise cash. The company reported a $1.2 billion loss in 2023 and in July its CEO said it had been too aggressive in its expansion plans.

The potential sale follows problems for the company with production quality, sluggish demand and competition from China.

Likely buyers of the materials would be companies in the battery supply chain. Nickel sulphate is used to make the precursors that go into the cathode components of lithium-ion rechargeable batteries that power electric vehicles.

Lithium hydroxide might last up to about six months and nickel sulphate for up to a year, the second source said, as both absorb water which would render them unusable.

AGGRESSIVE EXPANSION

Europe's ambitions to build an EV battery industry had rested on startups such as Northvolt, which is years ahead of European peers like Norway's Morrow Batteries and Freyr, and Stellantis and Mercedes' joint venture Automotive Cells Company (ACC).

Marrow opened a battery cell factory this year in Norway but said it would take the company years to be able to sell batteries to an automotive company.

Despite being a leader in the industry, Northvolt has struggled to produce high-quality batteries in high enough volumes, leading to delays of EV ramp-up at truckmaker Scania and the cancellation by German auto maker BMW of a $2 billion order.

Its only factory has a capacity of 16 gigawatt-hours (GWh), but is currently producing at an annual rate of less than 1 GWh.

Northvolt has over the years received more than $10 billion in equity and debt financing from players including Volkswagen, Goldman Sachs and Blackrock, filings show, and has according to the company been trying over the past few months to raise more money.

It is not clear how much battery-making material it has in stock and what the value of any potential sale could be.

In particular, the lithium market is currently oversupplied as EV sales have slowed this year.

Lithium hydroxide is trading around $10,000 a metric ton, having crashed from records above $80,000 a ton hit in December 2022. Nickel sulphate prices have been fairly stable around $15,000-$16,000 a ton for some months.

Northvolt on Sept. 23 suspended plans for a large expansion of its factory in Skelleftea, and filed this week for bankruptcy of the unit in charge of the expansion.

On Wednesday, the head of the Ett plant stepped down.

Northvolt's head of procurement Simon Miller left in September, according to sources with direct knowledge of the matter and his Linkedin profile.

He was replaced by Caroline Vernet, who became senior director of raw materials, according to her Linkedin profile. She was previously senior strategy manager, it shows.

(Reporting by Pratima Desai and Marie Mannes; Editing by Josephine Mason and Elaine Hardcastle)