MONBAT – NEW LIFE FOR THE ‘OLD’ BATTERIES

How Europe’s No. 4 lead battery company is developing new technologies and products and showing the circular economy in action – a conversation with CEO Viktor Spiriev and Petar Hristov, the director of the plant in the town of Montana.

The transition to a low-carbon economy requires a huge number of batteries. How does Monbat’s portfolio fit into this reality?

VS: First, the emphasis on low-carbon economy and the intense public debate has generated a lot of controversy. Many describe the effort as political and lacking the intended effect. This is bad because many large segments of the population and businesses are forming negative attitudes without any knowledge of the subject matter, let alone enough information to build a rational position. As for Monbat, we manufacture batteries, mostly lead-acid ones. They are the product with the best parameters in the circular economy – nearly 98% of the mass of decommissioned batteries is recycled. But before we get to recycling, those batteries have a long and safe life cycle in which they store or provide energy. With the industrial batteries we manufacture and are used for energy storage and redundant power systems, they usually operate flawlessly for over 10 years.

Secondly, we are developing and commissioning pilot projects where battery energy storage systems (BESS) use lead-acid batteries and approach the performance of lithium-ion ones but at a more competitive cost. Another advantage is that we deliver them faster because they are made in Europe and at the end of their life, customers return them for recycling and recover part of their investment.

Thirdly, our lithium-ion cell and systems company EAS Batteries is working to grow its product portfolio. We have the ambition to develop this promising sector and offer lithium-ion energy storage solutions.

PH: As a pragmatic, I would add that demand for lead acid batteries continues to grow globally. Let us not forget that the world is not Europe – there are countries in Africa where less than 20% of the population has electricity. These people need solutions, not promises. They need electricity so that their children can study in the evening, turn on the TV and see what is going on in the world. I have been in the lead acid battery industry for over 30 years and had a former colleague and friend, God rest his soul, who had over 50 years in our sector. He used to say that we have been waiting for “the end of lead-acid batteries” for at least 50 years. So, my answer is – if there is a need for electricity, there will be a battery to store it. 

You have facilities in Serbia, Romania, and Italy, which means you have a broad perspective of this sector in Europe. Where is Monbat on the map of manufacturers in terms of capabilities and know-how?

VS: In these countries, we recycle lead because the need for raw materials is substantial, and we aim to close 100% of the lead supply chain through our own production. But if you’re talking about the battery market itself – we sell to over 70 countries worldwide. Monbat is Europe’s 4th largest manufacturer of lead-acid batteries and is among the most determined ones to find solutions for the energy transition – we are constantly improving our technologies and products, we have a sustainable commercial policy, and are flexible in the search of solutions for our customers. These are the three pillars which form the foundation of our core business. In addition, we are expanding the geography of the sectors where we have a presence – lithium-ion technologies, nanotechnology, engineering solutions, logistics, proprietary manufacturing automation solutions, and others.

What is the company’s general approach to R&D and innovation?

VS: I would give it a definition that may sound a bit odd at a first glance: committed to rationality. Our long experience in the sector has taught us there is no prospect in our dynamic and energy hungry world without continuous development of new technologies and products. At the same time, as a financier, I know that any innovative solution must be economically feasible and needs cost justification. Our value chain is much longer and more complex than other sectors in terms of recycling, production optimization, and new product market launches. However, the results show that we have the capacity to manage it well and with good added value.

PH: Over the years, Monbat has developed a good synergy between development and bringing innovations to the production line. The colleagues from both areas work with common goals, striving to gain insight into each other’s work. This benefits me as a manager of a manufacturing company because I don’t have to waste time resolving “who’s the best” arguments. Our innovations are good only if they can go into mass production. We have been cooperating for many years with the Institute of Electrochemistry and Energy Systems of the Bulgarian Academy of Sciences. I would say that the scientists there also learn a lot from us because their approach is to do practical science.

Sustainable development for battery manufacturers requires two main approaches – on the one hand, increasing the life cycle of new products, and on the other hand recycling as much of the battery raw materials as possible. What are your achievements in these areas?

VS: As I said, lead-acid batteries are the product with the highest recycling rate. From this point of view, we have reached an excellent level of circular economy. On the other hand, we are innovators in Europe and even globally in many areas through internally developed or acquired know-how. To give you an example of our robust development capacity, our group owns patents through the Italian subsidiary STC S.r.l. for the desulphurisation of lead paste with urea to produce ammonium sulphate, two products that are environmentally friendly and used in agriculture. We are currently implementing it at the recycling plant in Romania to replace the current cost-ineffective practice of desulphurisation using sodium carbonate. Perhaps this will motivate the entire ecosystem of lead recyclers to start using our mode of operation. Going forward, we intend to implement another technology patented by STC related to the production of lead oxide directly from non-desulphurised paste, through chemical purification, without having to go through the carbon-rich pyrometallurgical processes that are generally accepted today. This technology is more cost-effective and would lead to a significant carbon footprint reduction. Moreover, we are among the few companies in Europe that can recycle the tin from decommissioned lead-acid batteries. We are also currently investigating the possibility of producing antimony trioxide by extracting the antimony from decommissioned batteries. If successful, we will be the second plant in Europe to do this.However, recycling interests mostly us and the environmentalists… Regular people do not contemplate the fact that batteries have become more reliable and are serving cars with increasing electricity consumption. The start-stop systems that have become standard in modern cars need batteries with specific characteristics. The new generation of AGM batteries serve this hunger for electricity best and we plan to increase their production as early as this year. At the same time, our goal is to reduce the carbon footprint for production and reduce their mass because modern cars are getting heavier.

PH: At our main production site in Montana, recycling and manufacturing have the shortest path between raw materials and product. When we launched recycling as a mainstream approach to sourcing a key raw material, it was an innovation – today, there are virtually no batteries being produced with virgin lead. The polypropylene from the battery boxes is also supplied in closed raw material cycle. We have plans to improve not only efficiency but also carbon footprint. Monbat’s successful approach in Montana is now being applied by Nour Batteries in Tunisia.

How sustainable is the entire supply chain in your business? How does your behaviour affect your partners and suppliers?

VS: If by sustainable we mean environmentally friendly, we are extremely sustainable! The closed raw material-product cycle is standard for our industry. The new EU Regulation on batteries and waste batteries stipulates that from 2027 all batteries must have a certain proportion of recycled raw materials in the new product – this has been the case for lead-acid batteries for the last 20+ years. In the case of lithium-ion batteries, this requirement will be introduced if, “…there is technological readiness”. Of course, our partners and suppliers are part of the process and, as a large public company, we subject them to rigorous environmental compliance checks.

Does the emergence of electric mobility mean that the role of lead-acid batteries in the automotive industry will diminish and is it possible that Monbat’s portfolio will change to adapt?

VS: One would have to be highly naive to believe that transportation could change fundamentally in such a short time span – the mass uptake of electric cars began less than 10 years ago. On the one hand, yes – electric mobility has changed markets and will continue to change them. But the trend over the past year towards ‘cooling’ of consumer subsidy policies and rethinking of many carmakers’ plans to electrify their portfolios is demanding more carefully considered decisions. One thing is clear – new technologies, both hybrid and EV, are still employing the ‘good old’ lead-acid batteries. As auxiliary and balancing components in their systems, these batteries maintain the functioning of electrical systems such as air conditioning, lighting, etc. Internal combustion engines are still the backbone of the transportation and logistics sector, and the change will be an even longer process. Having said that, as part of the lithium-ion business too, we already have partnerships in electric mobility. However, the dependence on Chinese components is becoming a threat, and it would not be surprising if many of the current stimulus policies are reconsidered.

PH: I would like to remind again that there are more continents in the world than Europe. As Mr Spiriev said, Chinese manufacturers are aggressively moving into subsidised electric vehicle production, but this is also creating serious tensions within EU and USA. The USA already has launched incentive programme for battery cell and block production, which will be followed by consumer incentives aimed at buying electric cars but only with batteries, manufactured in the USA. But going back to Monbat – it’s too early to write ourselves off.

Can Europe respond to this domination and how to do it?

VS: At a risk of repeating myself, do not proclaim lead dead! Demand for lithium-ion batteries is growing at a rate that vastly exceeds the current yield and production potential. There are other technologies that would probably chart the future, e.g. sodium-ion batteries, hydrogen fuel cells, etc. And if I am to make a comparison with the automotive business, there are hybrid solutions – like many other manufacturers in the sector, we are experimenting with hybrid technologies – lead and lithium batteries, supercapacitors, etc. This is not only a responsible approach, but as a financier I believe it is also a winning strategy. Anything else would be a speculation with people’s expectations and playground for high-risk investors.

PH: Europe has a lead battery industry that will have a market value of nearly €10 billion by 2025 and Monbat is part of it, with a very high share of added value derived from batteries produced in Montana and Dobrich. The potential for innovation is great, the market opportunities are even greater. It is important to remember that sustainable development is not a pseudo-religious mantra, but a balance of three components: society, environment, and economy. If one of these key elements is sacrificed for the other two, there is no sustainability and either society is paying for ecology or ecology is destroyed for money. Our goal is to remain sustainable in a balanced and achievable manner, not in some nebulous future, but here and now.

The Green Deal has made it – renewables are becoming more mainstream in industry and households, and more and more consumers are finding that they also need an energy storage system for their installations. Is this a good market for you?

VS: This is a natural direction for succeeding our expertise in reserved power solutions. We are aware of the preference of industrial and household users for lithium-ion technology. It has considerable advantages, but lead-carbon industrial batteries are offering optimal solutions at certain scales, and we have tested and deployed prototypes of lead-acid battery energy storage systems. Also, there are intense expectations and new players in this sector while our approach is to act with restraint and more realism. Let’s not forget that we have been in business for 65 years and have experienced and sustained many technological changes thanks to a balanced approach to the market and its whims.

The Fund of Funds plans to channel significant amounts to municipalities for energy efficiency. You are known for your approach to helping the local communities where you operate. In this sense, is it possible to collaborate with the municipality of Montana for a similar project that would require your capabilities and expertise?

PH: We have an excellent cooperation with the municipality of Montana, and we are always ready for partnerships based on our technological solutions. We do not interfere in municipal politics, but I personally would be happy if the municipality of Montana would take advantage of these funds. I was born in Montana, I live here, and I always want to bring out our true regional potential. If we are to apply in such a project, it would be in competition with other manufacturers and suppliers, and we will have to prove that we are offering better solution in order to be selected in a transparent and fair procedure. There are many locations in the municipality where storage systems combined with renewable energy can resolve problems related to an outdated or even missing power grid. And what better way than, to have systems ‘Made in Montana’  operated in Montana?

What are the company’s short- and medium-term development plans and what will their implementation depend on? 

VS: It would take us quite a while to list and explain all of them even in passing. First, the new EU regulation we mentioned earlier, will require to significantly reduce our consumption of fossil fuels. Their consumption is primarily related to the recycling of lead and lead alloys. We strive to introduce technologies minimizing natural gas consumption. STC is already working hard on this goal. We have already deployed equipment in all three recycling plants in the Balkans saving approx. 40% of the total CNG consumption in the recycling of lead-containing raw materials. We strive to improve the technological processes in the recycling division, and some of the projects we are working on, do have the potential to change the industry – economically and environmentally. We are also aiming for full 100% mass recovery of decommissioned batteries – by extracting tin and antimony and by developing technology to process the separator (which is now treated as hazardous waste). Our plans in the starter division are related to the geographical expansion of our customer portfolio and a partial shift towards Africa, the Middle East and, in the future, the Americas. This reorientation was initiated in 2022 through the acquisition of a majority stake in Nour Batteries, Tunisia. As mentioned above, our plans in the industrial segment are related to the development, production, and deployment of BESS. We are also working on battery technology improvements for small industrial applications and off-road mobility, as this is one of the areas where market growth is expected.

PH: We need to make this business a more attractive for the potential employees. This is a major challenge in the entire region of Northwestern Bulgaria. People are fleeing, they don’t see the perspective here, and this is quite sad. At the same time, many young people want to return to Montana, but they would expect adequate living conditions.