Electrification and energy storage expected to drive demand for battery materials

Mexico City-based chemicals and industrial products company Orbia expects rising long-term demand for its battery materials, regardless of any changes to energy policy made by US President Donald Trump.

Orbia's subsidiary Koura is one of the world's largest producers of fluorine-based chemicals and has major operations in both the US and Mexico.

Fluorine is used in the production of electrolytes for lithium-ion batteries, among other applications.

"There has been a lot of noise since the change of administration in terms of what their policies will be towards the energy transition," CEO Sameer Bharadwaja said on an earnings call.

"Even though there might be a near-term slowdown... long term it's going to be driven by market forces and there's a positive direction in terms of market forces driving EV demand."

Rising requirements for stationary energy storage are also increasing demand for the company's battery materials, Bharadwaja told the call.

The spread of intermittent wind and solar power and increasing investments in datacenters for artificial intelligence are increasing the need for energy storage.

"With the growth in AI, the amount of energy required is enormous and this is causing havoc on the grid," Bharadwaja said. "Energy storage is another way to manage that."

"Regardless of what we see in terms of policies from the Trump administration, energy storage markets remain robust."

Tariffs and grants

If Trump imposes tariffs on imports of battery materials from China, that would help Orbia, Bharadwaja added.

Under the Joe Biden administration, Orbia received a US$100mn grant from the US Department of Energy (DoE) to produce fluorochemicals in the US for use in EV batteries.

"We are still waiting for further clarity from the Trump administration on what's going to happen with the DoE grants," Bharadwaja said.

"The previous administration and folks at DoE clearly understood the criticality of fluorine in securing the North American value chain for both batteries and semiconductors."

Orbia, which is listed on the Mexican stock exchange, also makes plastic resins, pipes and fittings for the construction industry, telecom cables and digital products for farmers.