(Kitco News) - While China may lead in scale for manufacturing lithium-ion batteries, North American and European battery producers will have one distinct advantage, said Nano One Materials Chief Operating Officer Alex Holmes.

Vancouver-based Nano One Materials (TSX: NANO) is focused on lithium-ion battery cathode process improvements to make batteries cheaper and more durable, as well as reducing carbon output.

Holmes said Western-based automakers want localized battery sources, so supply chains are more resilient.  According to a forecast by Benchmark Minerals, China will hold two-thirds of global lithium ion cell capacity by the end of the decade. Western manufacturers can't compete on cost and will need to find their own niche.

"We have higher costs in our jurisdiction, so we believe it's very important to bring differentiated technologies to market," said Holmes.

Last month Rio Tinto signed a $10 million partnership with Nano One. The miner is interested in Nano's work on LFP, lithium iron phosphate batteries, which are cheaper compared to nickel-based batteries and other material alternatives. The LFP batteries have some drawbacks, but Holmes said these are being overcome.

"Rio Tinto has a very large integrated iron ore smelting-to-metal-powders refining business," said Holmes noting that Rio Tinto's Quebec plant is the largest of its kind outside of China. The plant currently supplies automotive manufacturers. "There's really a great alignment of interests."

Based on market capitalization, Rio Tinto is the world's number two diversified miner.

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