Ilika plc (LON:IKA) is the topic of conversation when Baden Hill’s Clean-Tech Equities Specialist Dr Tom McColm caught up with DirectorsTalk for an exclusive interview.
Q1: Tom, Ilika have released an RNS update on Wednesday around their Goliath programme. Can you summarise it for us please?
A1: The company has been working on a 12-month UK government funded project via the Advanced Propulsion Centre – APC – with some automotive scale up specialists called Comau which is part of the blue-chip auto maker Stellantis. The RNS was flagging the conclusion of this project which comprised two main components:
The first component of it was to review and validate the company’s current plan to scale up from its lab scale of 50 kilowatt hours per year to a pre-pilot 2 megawatt hours per year. What the RNS confirmed was the plan had passed muster and they have now begun kit procurement for this scale up which is scheduled to complete and be operational by the end of 2023.
The second component of the project was for Comau to perform an assessment on the company’s Goliath manufacturing processes with respect to their suitability to megawatt scale up and beyond. This was also a success, the RNS pointed out that the processes did prove suitable for scale up and there was an interesting finding that there’s actually a potential benefit compared to tradition lithium-ion production around an accelerated formation stage of the batteries that associated reduced formation time. It meant that the production would be comparatively less capital per kilowatt hour tied up in work in progress.
So, it was overall an announcement of the conclusion of a successfully executed project.
Q2: What’s your take in respect to the company’s business?
A2: One of the things we’ve discussed previously on the company is how far do they intend to take the Goliath part of its business and what are they going to do with it.
What this tells us is the company has raised and is committing the capital to build and prove out Goliath processing in-house up to at least the pre-pilot 2 megawatt hour a year level and possibly beyond.
Q3: Does this affect your view on their business going forward then?
A3: It doesn’t really fundamentally change anything. Their small format Stereax batteries for the medical and IoT applications remain their primary focus and will be their first commercial products to market and will be the things that take them through breakeven and being a proper business.
I think if the in-house Goliath scale up is executed successfully then it will increase the overall value of the business because develop to that stage then the sell-off or spin-off value of that Goliath part of the business will be materially enhanced which is quite an exciting prospect for shareholders.
Q4: What do you assess as the implications with respect to the UK battery sector?
A4: As we said, this was a UK government funded project and the company’s decision to scale up and crack on just shows that there’s definite interest in the UK in alternative battery chemistries and formats to that of the traditional incumbent lithium-ion batteries.
Q5: Does this impact your take on the global battery market more generally?
A5: I would say impact, it basically reinforces it. China dominates the incumbent lithium-ion market and new entrants are always going to struggle, however the supply chain issues and performance limitation in key markets in incumbent lithium-ion batteries are getting worse and there’s no real solutions on the horizon. I’m talking about cobalt, lithium itself etc. so new second generation alternative battery technologies such as solid state lithium, sodium etc. are needed and they will ultimately supplant the incumbent.
So, it really is the place for new entrants to focus, I would say, which is what Ilika and, arguably, the UK are doing.