➤ The energy transition is fueling a booming battery sector, but worker skills and raw materials present a challenge.

➤ Larger, incumbent miners can take on the task, or risk losing business to newcomers.

➤ Batteries are increasingly economical on their own, but governments can accelerate the shift.

FREYR Battery is a European company developing industrial-scale lithium-ion battery manufacturing that will go into electric vehicles, energy storage systems and marine applications. The company uses technology from 24M Technologies Inc., a U.S.-based spinoff from the Massachusetts Institute of Technology.

In October, FREYR announced a 50/50 venture with Koch Strategic Platforms LLC, the investment arm of Koch Industries Inc., to develop battery cell manufacturing in the U.S. Koch Strategic Platforms was also a lead investor in a transaction that led to FREYR's recent public listing on the New York Stock Exchange.

FREYR aims to meet the growing demand for batteries with a product that is sustainably produced, by partnering with companies up and down the supply chain and using renewable power at its own manufacturing facilities.

The company outlined plans on Dec. 16 to develop 43 GWh of battery cell production capacity by 2025 and up to 83 GWh in total capacity by 2028, including five facilities in northern Norway.

S&P Global Market Intelligence spoke with FREYR Battery CEO Tom Jensen about the challenges facing the battery industry ahead. The following conversation has been edited for clarity and length.

S&P Global Market Intelligence: What are some of the greatest challenges or obstacles for both your company and the battery industry in general?

Tom Jensen: Many are worried, is there enough raw materials? Is there enough lithium? Is there enough cobalt? Is there enough nickel?

The more general challenge is not that the planet doesn't have sufficient resources for the fully decarbonized world where batteries play a significant role. There is more than enough lithium. There's more than enough cobalt. There's more than enough nickel on the planet to substantiate and support a very large lithium-ion battery industry. There will be, and there are, temporary bottlenecks. We need to ensure that the entire supply chain and the entire value chain are scaled up in synchronicity.

The flexibility of our platform, and the fact that it's already commercially introduced and we already have all of our raw material suppliers kind of lined up, provides us with strong comfort that we will overcome that problem. But, it is a general strategic problem for the industry.

A second thing is competency. Many are talking about the war for talent. There is a de facto energy transition happening. That means that a lot of the competencies that have been developed in the fossil energy era, many of those very capable people, have to be utilized and retrained to this new industry. At the same time, technological solutions are undergoing very rapid development.

One core challenge is the speed at which one responds to this challenge. But it's absolutely doable. As we like to say, we just need to get up a little bit earlier in the morning and work hard to get there.

These days, miners are talking more about opportunities from the green energy transition. But, generally speaking, do you think mining companies will be able to get ready for this energy transition or are those bottlenecks inevitable?

They have the capabilities, and they understand where the not-yet-mined rock and the different minerals are located. Some of them are, of course, quite active in this space. You're already seeing that some of the very large companies are taking the absolute right steps to ensure that they are going to be relevant for this booming industry.

On top of this, of course, you will have a number of startup companies and newcomers that come into this space with new ideas and that are able to move a lot faster and challenge the incumbents.

I think you will see some of the existing incumbents can step up to the plate and become relevant to this increasing demand for sustainably extracted, sustainably produced and ethically and responsibly developed inputs. If they're not able to do that, there will be newcomers who will be able to raise the necessary capital and attract the necessary competencies and actually move a lot faster into doing it.

There will be temporary bottlenecks because this is not linear. But, medium to long term, the undercurrents in this are so strong that we're quite optimistic that this will solve itself.

What role do governments play in helping deploy battery technology in the near term?

There are three things that drive adoption in any industry, and maybe in particular, in this one right now. So first, you need to have technological solutions that are viable, that are proven and that provide the right product.

Second, that technology needs to provide cost levels that are competitive and that are economically viable. There needs to be a profit motive for things to scale rapidly.

The third thing that can accelerate the adoption of this is regulation. But absent the two former [reaching] relevant levels, regulation will not necessarily help too much in terms of accelerating adoption. Timing is, as they say, always everything. The timing is now very appropriate.

But of course, it's urgent. We need to do this a lot faster than what we're doing today. We need to 10-fold installed battery capacity in the next decade. Ten-folding the existing capacity, which has taken 30 years to develop, in less than 10 years, gives you an idea of the magnitude of the challenge.

I think the government has to play a role in supporting the financial aspects of this. I'm not talking about grants or gifts in any way, but unlocking competitively priced financing structures and guarantee mechanisms to basically create risk-reward structures for investors who will deploy billions and billions, if not trillions of dollars into this transition.

FREYR is evaluating the construction of a gigafactory battery plant in the U.S. What can you tell us about the site selection for that factory?

We will be looking for relevant industrial sites, maybe even existing industrial buildings, into which we can retrofit brownfield-like developments for the purpose of speed.

Another important aspect for us is the availability of renewable energy. The third part would be proximity, potentially, to raw materials or proximity to processing facilities for raw materials. The fourth factor would be proximity to customers. Increasingly, customers want security of supply, at least regionally and in many aspects locally. A sixth criteria would be, areas in the Koch Strategic Platforms ecosystem where establishing make more sense because we can leverage part of existing infrastructure and so on.

Of course, there will be trade-offs in this. Not all of these criteria will be met in any given location. So there will need to be, you know, a rank-order process where we basically figure out exactly where do we aim to build.

We don't necessarily anticipate building one big gigafactory of 50-gigawatt hours. We could build multiple smaller facilities — still at a gigawatt-hour scale — in various jurisdictions.