Fertilizer is currently the biggest application of phosphate globally. Phosphate is a macronutrient in more than 85% of all fertilizers and given that phosphate demand for fertilizer is projected to continue, there are specialty applications of phosphate that may be worth looking into for investors.
Consumers of products like food preservatives, detergents, animal feeds, and cosmetics are driving an increased interest in phosphate. However, the real interest could be in how phosphate can potentially revolutionize the world of electric vehicles (EVs).
For decades, companies — specifically North American companies — placed their bets on lithium-ion batteries, which rely heavily on lithium, cobalt, and nickel. However, carmakers and engineers are now turning away from nickel and cobalt-based lithium-ion batteries in favor of lithium iron phosphate batteries (LFPs). The transition is largely occurring because cobalt and nickel are scarce, expensive, and controversial raw elements to mine.
According to a recent research report by Wood Mackenzie Power & Renewables, lithium iron phosphate is on course to be the leading battery chemistry for EVs by 2028, replacing their cobalt and nickel-based lithium-ion predecessor. LFPs are safer, less expensive than alternatives and last longer. LFPs can also be recycled and used in other energy storage systems after their lifecycle has ended within an EV.
The P In LFP - Igneous v. Sedimentary Phosphate
When looking at specialty applications of phosphate for things like LFPs, the extraction of phosphate becomes slightly more complicated. Globally, the phosphate supply is dominated by the Middle East and North Africa (MENA). China is also a substantial exporter of phosphate fertilizers (MAP & DAP) and they abruptly withdrew from the market last year, now only providing spot market sales. Lastly, Russia is a considerable producer of phosphate, and igneous at that, but the Russia-Ukraine war has made the material unavailable to many Western jurisdictions.
When it comes to phosphate deposits there are two different types: sedimentary deposits and igneous deposits. Under 10% of global phosphate is in igneous deposits. Igneous deposits are not only better for the environment with fewer contaminants present like heavy metals or uranium but igneous deposits also have a better grade of ore and can be used in specialty applications like LFPs.
As demand continues to grow for specialty applications such as the LFP, a larger percentage of phosphate application will need to come from high-quality concentrates that can only be found in igneous deposits. Arianne Phosphate Inc. DAN DRRSF is one potentially promising phosphate mining company that has access to igneous deposits and, can respond to the growing global demand for phosphate. Historically phosphate demand grows at 1.5%-2% a year for agricultural use and is expected to grow at a much faster rate now that the LFP has come into the equation.
Arianne Phosphate says its Lac à Paul project in Quebec is a very rare project that is laying the groundwork for becoming an invaluable supplier to North American and European companies. First, the deposit is igneous and can produce a phosphate concentrate purer than most/all of the world’s phosphate, most of which is housed in sedimentary rock. Second, the Canada-based company adheres to stricter environmental, social and corporate standards, aligning with North American and European agendas.
The Lac à Paul project has access to world-class infrastructure and is fully permitted. The Lac à Paul project is also not owned by an integrated fertilizer company which will allow for the mined phosphate to be used for a variety of different commercial agendas. Arianne Phosphate is entering the market at what could be a perfect time as American policymakers are eager to depart from over dependence on foreign suppliers.
The U.S. recently announced that Canadian companies qualify under the 1950 Defense Production Act (DPA). This means that an investment in Canada by the Department of Defense will legally be the same as an investment domestically, opening a lot of doors for investment in Canada. President Biden’s administration shared that one of the leading reasons to implement the DPA was to create a flourishing EV market with more control of the supply chain and to become more self-sufficient.
If the US is looking to control the supply chain in the EV market, having access to a phosphate producer will be essential as companies further expand into LFP development and production. Arianne Phosphate seems to be well-positioned to help fill the supply gap and be a major asset to the EV market.
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