Neogen Chemicals To Spend Rs 450 Crore As Initial Investment For Electrolyte Production

Neogen Chemicals Ltd. plans to spend Rs 450 crore as an initial investment to set up 10,000 metric tonne electrolyte manufacturing capacity in India, following its exclusive technology transfer agreement with Mitsubishi Chemical Corp.’s subsidiary, MU Ionic Solutions Corp.

The capacity, from the specialty chemical manufacturer, will be used to meet India's upcoming demand from the lithium-ion battery manufacturers.

"The company will increase the investment and the capacity to 30,000 MTPA in a phased manner after receiving the technology from MUIS," Harin Kanani, managing director of Neogen Chemicals, told BQ Prime in an interview.

"We will also have a second round of discussions with customers and analyse the prospective demand from the country, since the initial spend was based on our technology and related demand prospects. But, with Mitsubishi technology, the demand will go up," Kanani said.

The specialty chemicals manufacturer will set up a dedicated subsidiary, Neogen Ionics Ltd., to execute the project. It has also entered into a memorandum of understanding with the government of Gujarat for a greenfield plant to set up the capacity.

Initially, a few tonnes will be manufactured from the existing facilities, but once they receive the land, future manufacturing of electrolytes and salts will happen there, Kanani said.

Electrolytes are one of the most important components of lithium-ion batteries. As of now, India does not produce the cells required in batteries. It is mostly imported from China. But, once production of cells starts under the production-linked incentive scheme, manufacturers will need to locally source electrolytes, Kanani said.

Under the PLI scheme, companies will have to mandatorily source 60% of the components locally.

The production of electrolytes also needs to be localised, as it would help save on costs and improve delivery efficiency. The electrolytes must be transported in specialised containers with zero moisture and impurities. It takes at least a month for imported containers to reach the Indian coast, Kanani said.

"With localised production, the battery manufacturers will be assured of quality products and a lower delivery time."       

In electrolytes, the only thing that is imported at present is lithium, but the electrolyte salts—the major cost contributor—and the electrolyte solvents will be manufactured in the country.

"We will be able to exceed the 70-80% of value addition under PLI as far as electrolytes are concerned, once we start commercial production of electrolytes," Kanani said.

India is expected to have a demand for 160 gigawatt-hours of lithium cells by 2030. That will require 1,50,000 metric tonnes of electrolytes, he said.

The company expects to meet 50% of India’s electrolyte demand, which will require 60 gigawatt-hours of lithium cells by 2027.