Refiner Phillips 66 is betting on EV batteries for the future because it thinks we have already reached peak oil demand.
The company has announced a strategic investment in an Australian lithium-ion battery materials supplier, saying, “This strategic investment enables Phillips 66 to directly support the development of the U.S. battery supply chain.”
“It advances our commitment to pursue lower-carbon solutions while leveraging our leadership position and expertise in the specialty coke market and supporting NOVONIX’s emerging position in U.S.-based anode production,” Phillips 66 chairman and chief executive Greg Garland also said.
Under the terms of the deal, the refiner will pay $150 million for a minority stake of 16 percent in Novonix and nominate a director for its board.
Novonix produces synthetic graphite, which is used to make anodes for EV batteries. Phillips 66, for its part, is one of the largest producers of specialty coke, which is used in the production of synthetic graphite.
Bloomberg reports that the stake acquisition comes as the refining sector in the U.S. struggles with the fallout of the pandemic, which included stock overhangs in gasoline and jet fuel. The situation is now quite different, but it seems Phillips 66 is not planning to remain a purely downstream oil company.
“We do think batteries are just going to grow,” Garland told media, as quoted by Bloomberg. “That’s actually an opportunity for us.”
The chief executive of Phillips added U.S. and European carmakers were trying to reduce their reliance on Chinese imports of batteries and battery materials.
Still, the refiner is not quitting its core business yet.
“You can’t build a Tesla without fossil fuels,” Garland says. “We have a role to play in this energy transition, and we’re anxious and willing to play that role”.
This role will likely be that of the producer of plastics and petrochemicals that are used in other industries such as solar panel production and battery manufacturing.