What role does Umicore play in the transformation that is now unfolding in the automotive space?
The electrification trend is already at full speed and in the years to come it is only going to intensify. Given all the incentives and legislations that fuel this transition, the automotive industry is moving at an unprecedented pace and we are seeing many companies struggling to keep up with it across the supply chain. Considering that such a big task cannot be completed alone, trustworthy partners like Umicore are worth more than gold in this day and age. If in the past OEMs were only building cars, nowadays they have bigger shoes to fill, with software and battery technologies becoming prerequisites in order to remain relevant in the market.
Ever since half a century ago, we have been one of the pioneers in the catalysts space, and given our recycling legacy, circularity is part of our DNA. The catalyst technology, in a nutshell, cleans the exhaust gasses with the help of a palladium, platinum and rhodium-based mixture. Furthermore, battery materials take an important portion of our portfolio as we provide the cathode materials with the lowest CO2 footprint in the industry. Currently, we are operating the only cathode active material gigafactory in Europe, and we are in the midst of building one of the first gigafactories in Canada.
For 30 years we have been a prominent recycling player, first in spent automotive catalysts and electronic scraps which we re-transformed into precious metals, and more recently in lithium-ion batteries.
Umicore was a mining company originally, so the transformation of metals is at our core, and since they are the basic component of every battery, we could consider that metals are the oil of the future. Because gigafactories have a scrap rate of 30%, the demand for recycling factories is on the rise. Consequently, by 2027, we plan to expand the capacity of our Belgium plant from 15,000 tonnes to 150,000 tonnes.
How are you facing the potential gap that we are going to see in the supply chain? What other challenges are you anticipating will be looming over the industry in the future?
The struggle is not only to obtain the necessary raw materials, but to secure the metals with the lowest CO2 footprint. After doing the math, all the Scope 3 emissions resulting from the manufacturing process of an EV are finally written off when the car's odometer displays between 50,000 and 80,000 kilometers. The cathode material makes up for 10% of the value of an EV but it also amounts to 60% of the entire CO2 emissions. Since 2004, when we created the Sustainable Cobalt Sourcing Guideline that is now an industry standard, we have been continuously working on enhancing our ESG business practices.
Although talent is not an automotive specific challenge, this accelerated transition pitches all the players against each other to attract and retain the necessary skilled workforce to support their future developments. Both the European and the North American education systems lack the force to produce enough technical talent to appease this growing demand. Luckily, Umicore has a purpose driven business model that attracts mostly young professionals who appreciate the opportunity to bring their contribution to this journey of creating a healthier planet.
In your view, to what extent is this transition occurring naturally and how much of it is pushed through various incentives?
Clearly, the pacing is extremely alert and when you match the announced buildup of EV production in the U.S. and Europe against the capacity of the supply chain to provide the necessary critical materials, there is a gap of 10% to 30%. OEMs are conscious the they lose market share in the U.S. if they cannot offer IRA benefits, and in Europe they will be banned from selling ICE cars starting with 2035. This realization gives way to a constant race after supply chain providers, and although we are well equipped to serve this growing demand, the road ahead will be bumpy for the whole industry.
After one year and a half at Umicore, what impressed you the most and how are you envisioning the future of the company?
Coming from the automotive supply Tier 1 sector, I was pleasantly surprised to see the amount of deep technical know-how that Umicore's employees are endowed with. Across our daily operations, we need to dive in at subatomic level to create priceless materials, so it has been truly a privilege to become part of this company, especially at this point in time, when the market is undergoing such decisive changes. In the future, I see Umicore well suited to be one of the key beneficiaries of this transition race.
