Arianne Phosphate ($DRRSF) ($DAN): A Deep Dive Into LFP Batteries Advantages & Future Prospects

Benzinga

Arianne Phosphate develops and maintains the Lac à Paul site in Canada, the largest greenfield deposit of phosphate in the world. The site produces high-quality phosphate from igneous deposits, a rare form that lacks many of the challenges associated with the much more common sedimentary form.  Phosphate is a critical component of fertilizers and is now used in battery technology that may become a dominant technology in the ever-expanding EV market.

Transcript

00:00 Welcome, it's Michael Murray with Benzinga. I have here with me today, Brian Ostroff,

00:05 the President and Director of Ariane Phosphate. Brian, thank you very much for joining us.

00:09 How are you?

00:10 I'm doing well. Thanks for making some time for me.

00:13 It's a pleasure to have you here, Brian. Thank you for joining us. We know there's been a

00:16 lot of interest in batteries, but of late, we're starting to hear more about the lithium

00:21 iron phosphate or LFP for short battery. What can you tell us about that?

00:25 Well, you know, the LFP actually has been around for quite some time. But really, it's

00:32 only been the last couple of years that the West has started to pick up on it. So, you

00:39 know, we've seen Western car companies start to look to put them into their offerings.

00:46 So Tesla, Ford, GM, Volkswagen, etc. And really, I think it's because of some of the advantages

00:55 that we now see with the LFP. So, you know, first and foremost, safety, there's no thermal

01:02 runaway, these things aren't going to burst into flames. You know, you get a lot more

01:09 charges, a lot more cycles in the life of the battery. And that, of course, is important.

01:16 And the charging cycles are easy. You don't have to let it run all the way down and charge

01:21 it all the way up. And then lastly, just from a cost perspective, the LFP makes a whole

01:28 lot of sense.

01:30 Absolutely. Now, given that, why has the LFP been so slow to make its way here to the West

01:34 in your estimation?

01:35 Yeah, you know, that is a really good question, because as I say, in Asia, it's been the predominant

01:43 battery for quite some time. You know, I think a lot of it was really around the range that

01:51 your car could get on a charge. And it's really been the last few years that that has gotten

01:58 better. So today, you get decent range, you get 300, 350 kilometers on a charge. And,

02:08 you know, that's good. And, you know, particularly even in the West, a lot of these cars are

02:16 going to be smaller cars. They're in the city. You know, getting 300, 350 kilometers is quite

02:26 a bit. I mean, if you're living in a big city, you know, I drive to the office, you know,

02:33 after the office, I'll drive to the gym, pick up some groceries, get home, you know, maybe

02:38 I've gone 50 or 60 kilometers. And so, I think that with that, with the improved range, it

02:50 just now is starting to make a lot more sense for the West and especially for the reasons

02:57 that I had previously cited.

02:59 Understood. So where does the LFP sit today and what are its future prospects as you look

03:04 ahead down the road?

03:05 Yeah, so it's interesting that you talk about kind of the future prospects, because, and

03:13 I think it would surprise a lot of viewers to know this, but, you know, for all of it,

03:21 again, the LFP is maybe a little new here in the West, but the LFP today is actually

03:29 over 30% of all batteries. And looking into the future, you know, most industry analysts

03:38 view the LFP as heading to be the most predominant of all the battery chemistries by the end

03:47 of this decade. So, you know, why is that? Of course, we've talked about many of the

03:55 car companies looking to use these in their vehicles, but also the LFP is an ideal chemistry,

04:06 an ideal technology for energy storage, say at the home. As more and more people, you

04:13 know, are looking to move away from fossil fuels or maybe live off the grid and they're

04:18 relying on solar panels or wind, you know, it's great to capture that energy, but ultimately

04:26 you have to store it for when you need it. And, you know, LFPs are going to be a really,

04:33 really big part of that. And in fact, also by the end of this decade, you know, it's

04:40 projected that you're going to have more LFPs in energy storage than you even will in the

04:49 car.

04:50 Perfect. So talking about the future, then what does demand look like going into the

04:53 future? I think you've already given us a pretty good look of it, but maybe a recap

04:56 of what you expect in the future when it comes to demand overall.

04:59 Yeah. So, I mean, one of the things about phosphate and particularly because of its

05:05 use in fertilizer is historically demand for it has always grown. So that phosphate concentrate,

05:13 the demand for it grows historically at roughly 2% a year. Now, if you start to look at the

05:22 demand coming with the LFP, that actually is really going to be a big game changer because

05:34 rather than looking at annual demand growth of say 2%, you're going to look at annual

05:40 demand growth of, you know, 6, 7, 8%. And of course we understand that five years out,

05:48 you know, two on two on two on two versus, you know, six on six on six on six, you're

05:53 looking at a much different number. So, you know, you are going to see demand continue

05:59 to ramp up for phosphate. But, you know, in particular, when you're looking at the LFP

06:06 and the demand for the LFP, what you're going to see is demand growing for the purified

06:15 phosphoric acid. And if you start penciling that out, you actually are going to have to

06:22 outright double your supply of purified phosphoric acid. And that of course is huge. This isn't

06:30 2% or 6% or 8%. You know, over the next few years, you're going to need 100% growth of

06:38 PPA. So, you know, new supply is absolutely going to have to be built out.

06:46 Understood. Now we'd want to bring it back just for a second to discuss Ariane in more

06:50 detail, but in the few minutes that we have left here, can you tell us why your company

06:54 is best suited to address this growing need when it comes to the lithium space?

06:58 Yeah. Okay. So, I mean, first and foremost, Ariane today has the world's largest greenfield

07:07 phosphate deposit owned by an independent. I mean, this thing is absolutely huge in terms

07:15 of its size and scope. And then as I, you know, kind of alluded to, because of the nature

07:23 of our phosphate, we actually make the purest or amongst the purest phosphate concentrates

07:31 in the world. And that makes it ideal to make the PPA, the purified phosphoric acid for

07:39 use in the LFP. And the reality is the only thing that's comparable out there today comes

07:47 out of Northern Russia. And of course, with the geopolitical concerns that we're seeing

07:53 getting in East versus West and things like that, you know, that's definitely an issue.

08:00 Now, in our case, Ariane's got this big deposit capable of making this high purity phosphate

08:09 and we're situated in Quebec, Canada. What a wonderful mining jurisdiction. Again, when

08:16 you compare it to Russia or even in, you know, let's say the more normal phosphates, which

08:23 is China and the Middle East and North Africa. So, I think from a security of supply that

08:32 that's a big deal. And of course, we've seen with the LFP and a lot of these critical materials,

08:40 the West is starting to get very serious about insourcing. And being here in North America,

08:49 that makes us eligible for things like the Inflation Reduction Act or the Defense Production

08:59 Act. You know, certainly we've seen here in Quebec, they're very serious about building

09:05 out the whole battery ecosystem. So, as Western companies look to source materials that of

09:13 course, come from, let's say, a more secure jurisdiction, but as well, there are economic

09:19 advantages to Ariane is going to be on that extremely short list. And just to that, you

09:30 know, our project, the Lac Apolle project is fully permitted, shovel ready. So, it's

09:36 ready to go. There are other projects, of course, out there starting to move forward

09:41 to try and, you know, attract partners to target the LFP. But today, we're done. We're

09:53 shovel ready.

09:54 Couldn't agree more. Brian Ostroff, President and Director of Ariane Phosphate. It's been

09:59 an absolute pleasure having you with us here today. Thank you for the in-depth breakdown

10:03 of what you're doing in the industry, what's coming next, and why this industry is so poised

10:07 to become the next defining leader in the space. Brian, it's been a pleasure having

10:10 you. Thank you very much.

10:11 Thank you, Michael.

10:18 [BLANK_AUDIO]

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