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A123 Systems has filed for bankruptcy following a turbulent year. The Massachusetts-based lithium-ion battery manufacturer that employs 2 500 has been struggling to keep its head above water following disappointing sales of electric vehicles and a costly recall back in March 2012.

Johnson Controls Incorporated will buy the automotive business assets from A123 in a deal worth US$125 million. This will provide the finance for the company during bankruptcy. The factory in Michigan is to remain open for the time being.

This latest news puts halt to the discussions for a rescue buy-out by Wanxiang Group Corporation in August. The US$465 million deal would have meant the Chinese corporation held an 80% share in A123 and four of the nine board seats. However certain conditions, including A123's liquidity falling below operational levels, were not met so only $22.5 million of the loan amount has been funded. These complications prompted the deal with Johnson Controls. The talks had sparked political debate because A123 had received a substantial amount of public funding from the Obama administration to boost the advanced battery industry in the USA and there was unrest about the company then falling to non-American ownership.  

A123 Systems has filed for Chapter 11 bankruptcy protection on 16 October 2012 due to its mounting financial problems. There will be a bankruptcy auction for assets. Johnson Controls has provided A123 with US$72.5 million in debtor-in-possession financing to fund the bankruptcy case.

The Michigan-based battery maker has suffered because the EV market has failed to take off as quickly as hoped, only accounting for 3% of US car sales last year. For the first half of 2012 it reported losses of US$ 208 million, this vulnerable position led to the talks with Wanxiang Corp.

The mounting financial problems came despite a cash injection of US$249 million in the form of federal grants from the Obama administration in 2009. 

The bankruptcy will add fuel to the US presidential debate as another example of an unsuccessful ‘green’ investment by the Obama administration. Following EnerDel, A123 is the second of the 30 battery and electric drive companies that received government funding to go bankrupt. Excess of US$1.2 billion has been provided for battery makers, including A123 and Johnson Controls, over the past three years to boost the hybrid and electric vehicle market. Of the money A123 received in federal grants, US$132 million has been spent on building a factory in Michigan.

A123 has suffered losses of US$857 million since the company began and was at risk of being delisted from the stock market because of consistently low stock value.

Fraught battery manufacturer A123 Systems has been handed salvation in the form of a US $465 million investment from Chinese car-parts maker Wanxiang Group Corporation.

This will result in Wanxiang, one of China’s biggest non-governmental companies, owning 80% of A123 and holding four of the nine board seats for A123.

Earlier this year A123 announced it was running out of money, despite a cash injection from the Obama administration in 2009. This new investment could mean a government funded business will be in the hands of a non-US company that could out-source jobs.

The Michigan based battery maker has suffered because the EV market has failed to take off as quickly as hoped, only accounting for 3% of US car sales last year. For the second quarter of 2012 it reported losses of US$ 82.9 million so is in desperate need of help. A123 has 2 500 workers whose job security rests on the secure future of the company.

Chinese companies Kuraray and Kureha are to produce lithium-ion batteries made from plant-based raw materials at a joint factory in Okayama Prefecture.

Traditionally the anode material comes from graphite but the new factory will use ‘hard carbon’ made from plant materials, including coconut shells.  The effect of using the hard carbon will have a more complex crystal structure than conventional graphite.  This will reduce deterioration occurring because of repeated charge – discharge cycles.

The factory for the joint venture will be built at Kuraray Chemical’s carbon plant and will cost US$ 38 159 000.  Output of the factory should be 1 000 tons of anode material annually.  Building work is due to commence in October with plans for the factory to be operational in Autumn 2013 with plans for expansion already being considered.

Hitachi Chemical Co will increase its production capacity for industrial lead-acid batteries by next January by expanding facilities of the subsidiary company Shin-Kobe Electric Machinery Co.

Some US$12 750000 (one billion yen) will be spent on constructing a building with a new assembly line at Shin-Kobe's Nabari Works in Mie Prefecture, the main site making lead-acid batteries.  It is estimated cell production capacity is likely to increase by 50%.

The site will make back-up power source batteries, the LL-W series of which demand is growing for in offices and factories at risk of power failures.  Joining 192 LL-W batteries together can produce 40kw of electricity for around ten hours.

Shin-Kobe Co. accounts for roughly 30% of the domestic market for industrial lead-acid batteries.  The LL-W products claim a battery life of 17 years, one of the world's longest, and are a fraction of the cost of a lithium-ion counterpart. 

China has published a white paper confirming its position on rare earth elements following a complaint filed to the World Trade Organisation.  The US, EU and Japan protested China are limiting their export of rare earth elements to protect domestic industries. China has rebuked this claim and cites mounting environmental damage by over-mining as the reason for slowing its mining programme.
The country is now being criticised for manipulating its estimation of reserves held. Previously they claimed to have 30% of the global reserves but now state it is closer to 20%. The Chinese government is fearful of the environmental impact of over mining.  The country has already come under much scrutiny for its poor environmental track record so vigilance should be welcomed. However some critics fear the re-estimation and slower mining of reserves could have more to do with keeping prices up than concerns for the land they come from.
Industries rely heavily upon rare earth elements and will have to look elsewhere for resources if China is to stand by its conviction.  Greenland could hold the answer, there is an estimated quarter of the elements required globally hidden beneath its ice.  Alternatively countries could follow suit with South-East Asia and by ‘urban mining’ – reclaiming used materials from landfill sites.