(Bloomberg) -- The son-in-law of India’s biggest steel tycoon is betting big on converting coal tar into graphite anodes for electric-car batteries in a bid to test China’s monopoly in the sector.
Vikram Handa set up Epsilon Advanced Materials Pvt -- India’s first manufacturer of lithium-ion battery parts -- in the southern state of Karnataka in August, sourcing the raw material from the largest steel mill in the country that’s owned by his father-in-law, Sajjan Jindal. Handa plans to invest 60 billion rupees ($807 million) to produce 100,000 tons of synthetic graphite anode by 2030, or about 10% of estimated global demand.
Anode materials are the negative electrode in lithium-ion batteries and account for a quarter of a cell’s components. China has been producing more than 80% of the world’s supply of these anodes, importing raw materials from countries including India. By producing the anodes in India, Handa aims to transition the South Asian nation from a battery minerals center to a battery materials hub.
India has great scope for the production of electric-vehicle batteries locally because it has access to the raw materials, a $20 billion manufacturing incentive plan, a proposed battery materials policy and improving prospects for demand, Handa, 40, said.
“I’m quite optimistic on the outlook for India’s battery space over the next decade,” he said. “It’s going to take another two to three years for really serious money to go into this space but after, you’ll see a lot of money pouring into it. India is such a big auto market that one cannot ignore it.”
Several Indian automakers have started producing or have announced plans to make EVs. The latest is Bhavish Aggarwal’s Ola Electric Mobility Pvt. Aggarwal has said he expects the startup will be making 15% of the world’s e-scooters by the summer of 2022. Then there’s Tesla Inc., which has picked Karnataka, the same state where Epsilon has its factory, for its first plant, according to the state’s chief minister.
One prime motivator for this pivot toward new-energy vehicles: cleaning up India’s choking toxic air. The adoption of EVs has been slow, crippled by a lack of charging infrastructure and technology, higher costs of the cars and a delayed flow of funds into development and production of batteries and other technologies. India currently has some battery assembly plants but no cell manufacturers. EVs account for about 5% of China’s annual car sales, according to BloombergNEF, compared to less than 1% in India.
“You’re so dependent on cells from China that your cost structure can never really come down,” Handa said. India has the expertise needed to make the cells, and it has plentiful raw materials like aluminum, copper, electrolytes and nickel, the key elements for batteries, he said, adding that “while everybody keeps talking about lithium, it’s a very small part of the whole raw material that goes into the cell.”
Epsilon’s parent company processes coal tar, mainly sourced from JSW Steel Ltd., into thick black pellets or liquid to be used in everything from automobile tires to fuels and paints. The switch to battery materials would require the company to further process the coal tar. In addition, Epsilon has secured a patent for the furnace design and expects to file another three patents this year. Currently, it’s exporting precursor anode material to China, Japan and Europe.
Handa’s ambitions are also getting a push from Prime Minister Narendra Modi’s goal to lure manufacturers from China. India’s Transport Minister Nitin Gadkari in March promised to announce a comprehensive battery policy “soon”. Epsilon has been in talks with about eight firms that are planning to bid under the government’s project to supply the anode, Handa said.
That domestic supply will become critical with EV sales forecast to overtake gas guzzlers in India by the end of the decade as prices become more aligned and infrastructure and technology improves, according to Mahindra & Mahindra Ltd., one of the country’s biggest automakers.
“If adoption of EVs picks up in India and tomorrow Tesla comes and sets up a factory, then a big chunk of the anodes will be utilized in the domestic market,” Handa said. “We’re confident that the Indian market will develop and we will have first mover advantage.”
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