Sydney might be a long way from the White House, but Sicona’s Christiaan Jordaan joined us to discuss how one of President Biden’s biggest reforms is helping to build batteries in Australia.
A Positive Climate doesn’t usually focus on policy, but we cannot ignore the global impact one government’s actions are having on clean energy technology.
In 2022, the United States Government legislated the Inflation Reduction Act. As part of a suite of initiatives, the act injects AUD$520 billion into energy programs to reach net zero emissions.
That includes funds to electrify US households and speed up the rollout of US manufactured electric vehicles.
This is where it gets interesting for companies like Sicona, who are based in Sydney and produce materials that could unlock higher capacity lithium ion batteries.
To be eligible for funding through the Act, renewable technologies need to be built with domestic manufacturing capacity. And for the purposes of eligibility, ‘domestic’ includes countries that have free trade deals with the US.
Christiaan explains that crucially includes Australia, but not China, where the vast majority of battery elements are made today.
“General Motors, Ford, Tesla, everyone building electric vehicle manufacturing facilities and also investing into the manufacturing of lithium-ion batteries. They then did the back calculation to see that all the materials and components that you need to do that are all coming from China."
The new funding delivered almost overnight benefits for Sicona, with the company quickly approached by a large vehicle manufacturer that was begging for samples of their products.
Tip of the iceberg
Christaan welcomes the newly cashed-up market for Sicona’s products, but says the biggest benefits still flow to US-based players.
Those companies can access additional government grants and loans, which is where things start to get tricky for their competitors based in other countries.
He explains that as an Australian company, Sicona misses out on the most generous parts of the scheme.
“For a company like Sicona, you could get $50 million to $200 million plus grants, free money, US dollars.”
He wants to see the Australian Government offer similar support to make Australia a renewable energy superpower.
This was part of the vision he outlined to the Federal Government through a submission to the National Gallery Strategy.
Christiaan told Nick that making Australia a renewable superpower is not rocket science, but it might mean mimicking our overseas friends, just like in the clip below:
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He hopes the Commonwealth Government will expand its National Reconstruction Fund to provide substantial grants for new projects to get through the “second valley of death” to build their first commercial scale plants.
He also wants to replicate the US approach with more loans made available to new projects, and a rollout of production tax credits to reduce tax payments for the early years of operation.
“Basically, the arguments I'm making are for Australia to capture more value, to manufacture more onshore, create high value job opportunities and not just dig and ship raw materials overseas.”
He believes the benefits of the scheme would outweigh the costs, which he predicts would be far lower than the current subsidies provided to the fossil fuel industry.
On the rise
It is clear that Sicona’s 27-person strong team is on the rise.
They recently closed a $22 million Series A round, which will allow them to invest in battery cell making equipment and develop a pilot production line. The investment was led by Himadri Speciality Chemical Ltd, Artesian, and Waratah Capital’s Electrification & Decarbonization fund. Riverstone Ventures, Chaos Ventures, Investible Climate Tech Fund LP and Club Investible also participated.
Christiaan acknowledges that they have been “overworking a small team and now we're overworking a larger team”, but the new resources are helping to plan their scale up.
For a deeper dive into Sicona’s work, listen to Christiaan’s last chat with Nick and Alex from 2021.
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