Pacific Trader: Burnaby-based Nano One is sparking interest with its battery tech

Partners including Volkswagen and Rio Tinto think it could cut the cost of EV batteries.

Credit: Nano One Twitter

Partners including Volkswagen and Rio Tinto think it could cut the cost of EV batteries

The stock: Investors looking to capitalize on the electrification of transportation have been fixated on lithium for a few years. There just isn’t enough lithium in the world to replace all of today’s internal combustion cars with electric vehicles (EVs) powered by lithium-ion batteries, they fret. (Never mind that the price of lithium has fallen by half since November.)

But there are other aspects of lithium-ion battery design that make this tool of the energy transition costly, inefficient and wasteful. Burnaby-based Nano One Materials Corp. (TSX:NANO) thinks it’s onto a solution, at least to cathodes, one of the battery’s two terminals that receive and dispatch electrons. Investors are increasingly taking notice.

The drivers: Composed of lithium, nickel, manganese and cobalt, cathode materials currently involve a complex supply chain and account for around a quarter of the cost of a lithium-ion battery. Forecasts pin the global market for cathode powders at US$23 billion by 2025.

Founded in 2011 and taken public in 2015, Nano One has developed what it calls the One-Pot Process that simplifies cathode manufacture. The process pre-coats the crystalline cathode powder so as to minimize unwanted side reactions that detract from battery performance and reduce battery life. It also cuts the amount of chemical waste produced, compared to current manufacturing methods.

With last year’s acquisition of Quebec-based Johnson Matthey Battery Materials, Nano One aims to make that its manufacturing site while maintaining its R&D operations in Burnaby. Revenues, let alone earnings, are still a few years out, making this still a highly speculative venture. Its asset base mainly consists of patents. But as commercialization approaches and blue-chip partners get behind the technology, the stock has been trending upward over the past year, closing at $3.19 as of March 28.

Word on the street: Roth Capital analyst Craig Irwin initiated coverage of NANO this month with a “buy” rating and one-year price target of $7. “Management has attracted an impressive group of nine development partners including Umicore, Saint Gobain, BASF, Volkswagen, two undisclosed automotive OEMs, Rio Tinto, Euro Manganese, and CBMM,” Irwin noted. “The acquisition of Johnson Matthey… added a team of 46 experienced technologists, greatly expanding engagement and execution capacity, while providing a path to more rapid production and development.”

Coming & going: Vancouver-based Western Copper and Gold Corp. (TSX:WRN) has announced a strategic investment from Mitsubishi Materials Corp. of Japan to help finance the company’s Casino project in the Yukon. The investment is worth up to 5 percent of Western’s shares outstanding. Major shareholder Rio Tinto Canada has a right to maintain its current ownership interest, meaning it will likely also participate in the offering.