Lithium Australia and Centrex Join Forces for LFP Manufacturing Venture in Australia

Lithium Australia Ltd (ASX:LIT, OTC:LMMFF) has entered a non-binding Memorandum of Understanding (MoU) with Centrex Ltd (ASX:CXM) concerning the potential establishment of a manufacturing plant for lithium ferro phosphate (LFP) and lithium manganese ferro phosphate (LMFP) cathode active materials in Australia. The MoU outlines collaboration possibilities, particularly regarding the supply of phosphoric acid sourced from Centrex's Ardmore Rock Phosphate Mine, operated by its subsidiary Agriflex Pty Ltd.  This phosphoric acid would be integral to a proposed demonstration plant to be constructed by Lithium Australia, utilizing its proprietary technology to produce cathode powders, including LFP and LMFP.  The plant's potential location would be in Queensland, with an initial annual capacity estimated at 250 tonnes of LFP or LMFP, requiring approximately 200-300 tonnes per annum of phosphoric acid.

Simon Linge, CEO and managing director of Lithium Australia, expressed enthusiasm about the MoU, stating, “The agreement with Centrex, a prominent phosphate concentrate producer, marks an exciting milestone in Lithium Australia’s efforts to commercialize our LFP and LMFP technologies. The increasing adoption of LFP and LMFP-based batteries in EVs worldwide, coupled with China’s current dominance in the global LFP battery supply chain, has prompted governments to implement policies aimed at securing future access to critical minerals and diversifying supply chains. Our partnership with Centrex underscores our dedication to establishing a domestic battery supply chain in Australia, offering global battery manufacturers an alternative source for LFP and LMFP. We eagerly anticipate collaborating with Centrex to advance the development of a demonstration plant.”.

Upon successful operation of the demonstration plant and the pre-qualification of the cathode powders, Lithium Australia (LIT) would proceed to establish a commercial plant with an estimated annual capacity of approximately 25,000 tonnes of LFP or LMFP, necessitating around 20,000-25,000 tonnes of phosphoric acid. Subsequent expansions to the commercial plant's capacity would be contingent upon market demand. The MoU, with a duration of 24 months, coincides with Centrex's pursuit of value-added opportunities for the Ardmore resource, particularly within the LFP battery market vertical. Given Ardmore's high-grade and low impurity profile, Centrex believes it possesses a significant competitive edge in producing high-quality, low-impurity phosphoric acid suitable for the LFP battery market.

This agreement offers a potential route to access the LFP battery market by facilitating the supply of phosphoric acid from Agriflex to Lithium Australia for the production of LFP and/or LMFP using LIT’s proprietary technology. Both Agriflex and Lithium Australia will extend support to the MoU and aim to advance towards a conditional binding offtake agreement for phosphate supply.  Lithium Australia will contribute technical expertise and conduct testing on phosphate samples from Agriflex to assess their suitability for producing LFP and LMFP. Agriflex will undertake a study to produce phosphoric acid in Queensland and furnish Lithium Australia with phosphate product specifications.

Robert Mencel, CEO and managing director of Centrex, expressed enthusiasm about the MoU, stating, “We are thrilled to establish this MoU with Lithium Australia, an Australian company renowned for its expertise in the rapidly expanding LFP battery market. As China currently holds sway over the global battery supply chain, concerns about supply security have prompted increased investments in more dependable jurisdictions like Australia. With Australia boasting a significant lithium production base and the growing global trend towards LFP battery technology adoption, the potential for establishing an LFP battery operation in Australia is substantial. The recent decision by the Australian Government to include phosphorus on its Strategic Minerals List further underscores the emerging prospects for a domestic LFP battery operation. The Ardmore Phosphate Mine holds considerable promise to capitalize on numerous lucrative market opportunities, owing to its high-grade phosphorus and low-impurity composition. Regarding the production of high-quality, low-impurity phosphoric acid suitable for the LFP market vertical, we believe Ardmore holds a significant competitive edge over its counterparts, both domestically and globally. We eagerly anticipate collaborating with Lithium Australia and our other partners on this promising venture.”.