Johnson Matthey sells bulk of battery material unit for £50mn

Johnson Matthey has sold the bulk of its battery material division to privately owned Australian group EV Metals for £50mn, as the UK chemicals group looks to draw a line under the unit’s failure and push into hydrogen technologies.

The sale came as the 205-year-old group slumped to a £217mn loss including discontinued operations because of an impairment on the division and outlined a new cost-cutting scheme aimed at delivering £150mn of annualised savings by 2025.

“This important divestment means Johnson Matthey can now focus on our core portfolio,” new chief executive Liam Condon said on Thursday. “Today I’ve outlined our new strategy, which explains how Johnson Matthey will create more value and help accelerate societal progress towards net zero.”

Johnson Matthey announced its plans to sell the battery materials business in November, disenchanting investors after the company had touted the unit as pivotal to the company’s future growth.

At the time, the London-listed company said the potential returns from the unit would be inadequate as the market became commoditised, making it more difficult to compete and turn a profit.

It revealed in January it had not found a buyer for the entire business and would pursue a sale of the division’s individual assets. It also started consultations with the unit’s more than 400 permanent employees about a closure.

EV Metal’s chief executive Michael Naylor said: “[It was] committed to protecting all high-value, specialist jobs within Johnson Matthey’s battery materials business and to driving further job creation by building out a UK electric vehicle [battery] supply chain.”

As a result of the sale, the cost its exit from the battery materials business is £100mn lower than Johnson Matthey had been expecting.

Johnson Matthey makes more than half of its revenues from catalytic converters that absorb harmful emissions from petrol and diesel cars, a sector that may enjoy a short-term benefit from tightening emissions standards but faces decline as governments ban new combustion engine vehicles.

Shares in Johnson Matthey slid 5 per cent in early trading, a drop attributed by Morningstar analyst Rob Hales to the company’s “unexciting” strategy update. The stock had received a boost last month after US industrial conglomerate Standard Industries’ purchase of a 5 per cent stake prompted takeover speculation.

For EV Metals the purchase will round off its product offering, which includes a nickel-cobalt deposit in Western Australia and nickel and lithium refining in Saudi Arabia. By adding the Johnson Matthey unit it will be able to supply metals needed to produce cathodes, the most expensive part of an electric car’s battery.

The deal includes the technology behind eLNO, a jet-black substance made from nickel, cobalt and lithium that Johnson Matthey believes could transform the EV industry by increasing the range and reducing the cost of batteries.

Johnson Matthey had been investing heavily in the technology, building eLNO production sites in Poland and Finland at a cost of £800mn-£850mn.

The sale also includes Johnson Matthey’s battery technology centres in Oxford and Billingham, a research centre in Germany and a partly constructed eLNO site in Konin, Poland.

As part of the deal, which is expected to be completed in the summer, Johnson Matthey will take a stake in EV Metals — more than half of which will still be owned by Saudi individuals — and take a seat on its board.