Company Interview / Developing an Australian first

Lee Finnear CEO of Li-S Energy (ASX:LIS), discussed the opening of their new $10 million facility in Geelong dedicated to the production of lithium sulphur batteries. Lee details the production process, explaining how they utilise pure lithium foil anodes in place of graphite and combine sulphur and carbon in their cathode instead of heavy metals. This novel chemical composition significantly reduces the weight of the batteries produced, making them fit for applications in the aviation sector, defence security units, and in particular, drones.

Li-S Energy is working in collaboration with Magna Aero, Seattle-based developers of electric aircraft. The company has also received an ETP (Emerging Aviation Technology Partnership Program) grant from the Australian Federal government to develop a high-endurance drone. Lee discussed the importance of such support, elaborating on how government backing, alongside the $22 million the company holds in cash, provides not just financial security but also a vote of confidence for their manufacturing capability.

In the face of a global lithium oversupply and consequent price drop, Li-S Energy is capitalising on an untouched avenue - lithium metal foil, necessary for advanced battery technologies. By becoming the first Australian company to produce this high-value product, Li-S Energy positions itself at a prime juncture for exporting to the global market. Their lithium foil's superior quality and tailorability to varying secondary battery dimensions render it competitive compared to broader market counterparts, commonly hailing from China.

Full unedited transcript:

0:00

Brisbane based battery technology company Lasse Energy has just opened a $10 million facility in Geelong to produce lithium sulphur batteries. The company also receiving a grant from the Australian government to create Australia's first production line for high quality lithium foil, for the details. Company chief executive Lee Finney joins us now. Leigh, welcome to us. Thanks for joining us. Um, first, then to what you just opened there in terms of what you're producing. Talk us through it.

0:29

Okay. Well, we've just opened, uh, we've officially opened our two megabyte, a two megawatt hour lithium, sulfur, and lithium metal battery production line. It's the largest pouch cell production facility in Australia. In the largest dry room in Australia. We, uh, started implementing commissioning it back in January of this year. And, um, it was great to have the minister finally come over and actually officially open the facility for us. It shows us a lot about how the Australian government is backing, uh, battery, uh, future for for the country. Well, let's go to what you're actually producing. Lithium sulfur battery production. What does that actually, uh, amount to? This is what the production of those ultralight batteries.

1:18

That's absolutely right. So lithium ion is is kind of it's almost yesterday's technology. It's uh it uses a graphite anode and a heavy metal cathode with nickel, cobalt, manganese and the like in it. Normally, um, we use a pure lithium foil anode instead of graphite, and we use sulfur and carbon in our cathode instead of those heavy metals. So it's a different chemistry. It gives us a much lighter weight battery, which means it's ideal for things that need to fly. Things that need more range, such as drones, electric aircraft and also defence security. And those types of applications. All right. So obviously that's your target market then aviation and and defence industries. Absolutely. What sort of do you have any uptake agreements in place at the moment?

2:10

At this point we're just producing our first cells out of our two megawatt hour production line. We have a number of partners, including Magna Aero, based out of Seattle. They're doing an electric aircraft, seven for NASA. Uh, we also have a number of other partners as well, even local partners in Australia. We just received an ETP Emerging Aviation Technology Partnership Program grant from the Australian Federal government to build a Dawn to dust dusk drone, a drone that can fly from five in the morning till seven at night.

2:42

How key is that backing from the federal government, and particularly just in terms of that that grant you've been awarded?

2:51

It's important for us as much for the recognition of the the new sovereign domestic manufacturing capability producing. Um, we have, uh, $22 million in cash. Um, we are not out seeking additional funding from the market at the moment, but, uh, but it is very good to get this federal support not only for, um, obviously reducing the overall costs of what we're doing, but also to, to get that, um, support from the government and the, the recognition that provides the company.

3:26

What is the growth in that industry that you're serving at the moment? And I, I see that you point out that Australia has a what you call an opportunity to capitalize on this emerging market. I mean, clearly, we know the lithium price has been under tremendous pressure. There seem to be a global oversupply at the moment. How would you look at more broadly?

3:47

Well, the key thing for us is that, um, the advanced battery technologies that are coming out now need lithium metal foil as the anode. And that's a very, uh, that's a very difficult product to produce. It's also a product Australia doesn't produce, even though we produce 52% of the world's lithium supply. We don't produce any lithium foils here. And what this does is allow us to create Australia's first lithium foil production line as part of our overall battery manufacturing facility and allows us to export those very high value products out of Australia to the international market. How competitive are you, then? Who are you up against globally?

4:29

From aluminum foil point of view, it's mainly China. China has um, primarily produces lithium for us, for primary batteries or batteries that don't need to be recharged again. We're targeting much higher quality, finer tolerance foils used for secondary batteries such as lithium, sulfur and lithium metal batteries around the world. All right, so what you're saying you don't directly compete with the Chinese products then?

4:53

No, we we produce foils that allow us to optimize the the tolerances, the size, the thickness for the new secondary batteries. And there's limited choice out there in the market for those foils at the moment.

5:09

Lee, just taking a look at your share price, which you had up earlier. Look, it has been under tremendous pressure since you since you listed. What's it going to take to turn that around? I mean, the story you have at the moment is very positive. So when do you think that's actually going to be reflected in the share price?

5:25

Well, I think the key thing for us is we're going through a process that we set out three years ago in our IPO, and we're following that on track on time. So a key part of this is to deliver tests and trial battery packs and battery cells to our partners so they can test them in their products and then

5:46

then produce the offtake agreements from there. So that's what we're doing right now. We've got, uh, the ability now to prove that we can manufacture at scale using commercial manufacturing equipment, unlike a lot of battery companies that are still in the in test tubes in the lab. So we've taken that step, we've moved ourselves forward. And, um, and we're starting to deliver cells this year to our partners. And what's the next step for the company? Now, you've obviously established,

6:16

um, this, uh, this production facility, plus you have the backing of the government.

6:22

Absolutely. So the next step for us to deliver those test and trials cells to our partners, build those demand indicators, those traditional, uh, those, uh, conditional offtake agreements. And at the same time, then look at the scale up of our capability beyond where we currently are. So either into a commercial factory at a much larger scale than we were at at the moment, which we call our phase four facility or beyond that, to license the technology to battery manufacturers around the world to adapt their lithium ion manufacturing facilities to suit our lithium, sulfur and lithium metal batteries. And we're proving that capability in our phase three, um, two megawatt hour facility we've just opened because the majority of that equipment is conventional lithium ion equipment. So it gives us that chance to prove that you can build these new batteries on existing production lines.