Nano One gearing up to disrupt the lithium ion battery materials market
Gary Neilson once wrote in a Harvard Business Review paper that “a brilliant strategy, blockbuster product or breakthrough technology can put you on the competitive map, but only solid execution can keep you there.”
Nano One Materials Corp. (TSXV: NNO) has captured the imagination of investors with a disruptive technology that can short-cut the traditional way of making cathode material used in lithium-ion batteries and ultimately improve their performance. The stock more than doubled last year to above C$2.00 a share as the company built a pilot plant in British Columbia.
Now, in Neilson’s words, it’s time for that solid execution strategy to click into place. There have been some unheralded milestones that can be found in publicly available company material, hinting they might just pull it off.
Firstly, the pilot plant has exceeded expectations, pumping out more cathode material than expected and allowing the company to develop full commercial design plans. More importantly, the company is in talks with a Tier 1 automotive supplier to supply its cobalt-free high-voltage spinel (HVS) and nickel-rich cathode materials to make a solid-state lithium-ion battery. Non-disclosure agreements (NDA) were signed with several other global players.
This is an exciting space. A number of companies from BMW to Toyota have announced plans to test solid-state batteries, which are seen as the next-gen battery capable of exceeding limitations of traditional liquid electrolyte batteries. The challenge for solid-state batteries is to make them affordable for consumers. Patenting a process that eliminates process steps in the productive chain is a big leap towards that goal. Eliminating cobalt from the procurement chain is a big plus. Nano One’s patented technology also allows manufacturers to use more readily available lithium carbonate, instead of tougher to obtain lithium hydroxide, side-stepping a significant supply chain issue that is predicted to get worse.
The company announced on Jan. 29 that pilot work enabled completion of preliminary engineering plans for a 3,300 ton/year cathode production unit that could supply 24,000 electric vehicle batteries. The line is modular, meaning it can be scaled up for smaller and larger facilities alike. Nano One has informed the market that royalty revenue for each of those modular units totals $5m. The modular unit, churning out 3,300tpy of materials at $40,000 a ton, generates revenue of $132 million per annum. A 4% royalty on that revenue would result in $5.2 million a year, per line, depending on negotiating terms.
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Never ignore key moves in senior staff, in any execution strategy. The company has started to build a commercial team this year, spearheaded by the current headhunting mission for a global vice president of corporate development. Such an appointment indicates a shift of gears from a focus on science to executives who have the means to engage with the right players. In other words, a telltale sign of a company that has a product to offer and is seeking the best possible deal.
Lastly, take a look at the accomplished management team that has been waiting for years to pull this off. Dan Blondal started his journey in 2011, co-founding Perfect Lithium Corp. to disrupt the traditional way of making cathode material. That effort became Nano One Materials in 2015. Proof of concept was proved back in 2012, and the first patents for the process were given in 2015. Dr. Stephen Campbell, the company’s chief scientist, worked for seven years as principal scientist at Automotive Fuel Cell Cooperation Corp. Russell Barton, lead engineer, has 40 years of experience including 18 years of designing parts and systems for fuel cell plants.
That’s a patient wait for a management team who are waiting for the big supply deal to come to fruition. Expect things to happen for this team of professionals in 2018. You can hear from Dan Blondal at this year’s InvestorIntel Buds, Batteries and Blockchain 2018 conference held in Toronto May 3-4.
Matt Craze has covered commodity markets for more than 20 years, working as a researcher at CRU International, and for over 10 years as a ... <Read more about Matt Craze>