First Phosphate Corp. (CSE:PHOS) CEO John Passalacqua said that LFP batteries, with their price and safety advantages, will be a “battery chemistry to flourish” in North America under proposed guidance on the clean vehicle provisions of the Inflation Reduction Act (IRA) by the US Department of the Treasury last week.
Starting in 2024, to enhance the security of America's supply chains, eligible clean vehicles must not incorporate battery components manufactured or assembled by a Foreign Entity of Concern (FEOC).
Additionally, from 2025 onwards, eligible clean vehicles must not contain critical minerals extracted, processed, or recycled by an FEOC.
The updated guidance aims to reduce dependence on foreign entities for key components in clean vehicles and critical minerals.
In a statement, Passalacqua expressed the company's alignment with the spirit of the IRA, highlighting their ongoing efforts to establish a comprehensive phosphate mine to lithium iron phosphate (LFP) battery supply chain in North America.
First Phosphate is ready to meet the outlined goals set by the US administration, the company told shareholders.
Of significant importance is the introduced requirement that vehicles must not exceed specified retail prices, promoting the viability of LFP batteries in North America. The mandate for full automotive manufacture and assembly in the US is seen as a positive step, benefitting local communities and workforces.
"With this new guidance, the US administration has made it clear that it wants to see the development of a local battery supply chain in North America and that it is intent to stop all attempts to arbitrage the IRA,” the CEO said.
“The loophole where foreign entities of concern could locate in US Free Trade Areas alone or with foreign partners, and supply components to the US battery industry has effectively been closed."
First Phosphate is a mineral development company focused on extracting and purifying phosphate for LFP battery production, aiming for high purity, responsible practices, and a low carbon footprint. With over 1,500 sq. km of royalty-free land claims in Quebec, Canada, the company plans to vertically integrate into North American LFP battery supply chains, leveraging its rare anorthosite igneous phosphate rock properties known for yielding high-purity phosphate material.
Shares of the company jumped as much as 12% in early Monday trading.
--Updates with share price--