Glencore backs battery start-up behind plans for UK’s first gigafactory

Cobalt updates

Mining group Glencore has acquired a stake in Britishvolt, the battery start-up behind ambitious plans for a gigafactory designed to equip the UK’s car industry for an electric future.

As part of the agreement, Glencore will also supply the gigafactory, which is under construction in Northumberland, with cobalt, a key raw material used in electric batteries.

The strategic partnership is the highest profile endorsement yet for Britain’s first gigafactory, a £2.6bn project that supporters say is vital if the country is to nurture a homegrown electric car industry and that will also help the government meet its carbon reduction targets.

With the UK banning petrol and diesel vehicle sales from 2030, the car industry is under intense pressure to establish the infrastructure, including the supply of batteries, to produce electric cars at scale and protect jobs.

“From Britishvolt’s perspective this is a major milestone, securing responsibly produced raw materials to help de-risk the project,” said Orral Nadjari, a former investment banker who is Britishvolt’s chief executive and founder. “If you look at global cobalt production two players stand out Glencore and the Chinese.”

The FTSE 100 company did not disclose the size of its investment in Britishvolt, but it will become one of the largest strategic backers of the start-up. Founded in 2019, Britishvolt has won backing from investors in the Middle East and Scandinavia.

The world’s biggest producer of cobalt, Glencore will supply 30 per cent of the metal that Britishvolt uses from 2024 to 2030. Its use in the burgeoning electric car industry has made cobalt one of the world’s most sought-after raw materials.

Glencore already supplies BWM and Tesla with the metal from its mines in the Democratic Republic of Congo and Australia. Tesla has been working with Glencore and others miners to develop a blockchain platform to ensure cobalt is produced ethically in the DRC.

The investment comes as Britishvolt, one of the few battery plants in Europe to have secured planning permission, is considering whether to go public in London or New York through merging with a special purpose acquisition vehicle.

The company has said that its plant, to be built on the site of a decommissioned coal-fired power station in the town of Blyth in north-east England, will initially employ 1,000 people. The workforce will climb to more than 3,000 once the gigafactory is at full capacity, a boon for one of the poorer parts of the UK.

Britishvolt chose the 93-hectare plot because of its deep sea harbour access and its electricity grid connection. The gigafactory is targeting capacity of 30 GWh/year, enough for 300,000 battery packs per year, with the first production expected at the end of 2023. By contrast, Tesla’s gigafactory in Nevada has a capacity of around 37 GWh.

Six companies are in talks with the UK government about building battery gigafactories but only Britishvolt, which is still testing its chemistry, and Nissan have publicly declared their plans.

The weight of electric batteries means carmakers typically want them produced close to where the rest of a vehicle is made, meaning that facilities in the UK are needed to maintain production for the likes of Land Rover and Mini.

By contrast, petrol and diesel engines made in one location are often then shipped across the world before being fitted into cars on assembly lines.

Glencore’s head cobalt trader David Brocas welcomed the deal with Britishvolt. “As the mobility and energy transition accelerates, so does forecast demand for future facing metals,” he said.

Additional reporting by Henry Sanderson

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