Samsung SDI inks $6.6 bn deal for 60% of elecfoil needs

Samsung SDI Co., South Korea’s major battery maker, inked a $6.6 billion contract to secure 60% of its needs for elecfoil, an ingredient for cell manufacturing, with Iljin Materials Co., a local electric vehicle battery materials maker.

The deal is expected to raise the enterprise value of Iljin, which has put up a majority stake up for sale.

Iljin, the world’s No. 2 elecfoil maker after Taiwan’s Chang Chun Group, said on Friday it has agreed to supply elecfoil to Samsung SDI’s battery plants at home and abroad from this year to 2030 in a deal of 8.5 trillion won ($6.6 billion). Elecfoil is a thin copper foil used for cathode collectors in rechargeable lithium batteries.

“We signed a contract to supply 60% of the total amount of elecfoil for secondary batteries that Samsung SDI needs every year,” Iljin said in a filing to a financial regulator. “An annual supply can be cut by up to 5% or increased by up to 20% even after a mandatory volume is decided.”

SAMSUNG SDI ESTIMATED TO PRODUCE UP TO 1,400 GWH

Samsung SDI, the world’s No. 7 EV battery maker, may produce as much as 1,400 gigawatt-hours (GWh) in the eight years, an analyst at a South Korean brokerage estimated based on the contract, which they said helped calculate its mid-to-long-term production capacity.

Iljin was estimated to supply 400,000-500,000 tons of elecfoil to Samsung SDI in the period with the assumption that about 600 tons of elecfoil priced at 200 billion won per 10,000 tons are used to produce 1 GWh, said Kim Chuljoong, an analyst at Mirae Asset Securities.

Through the estimate, Samsung SDI was calculated to use 650,000-830,000 tons of the copper foil to produce 1,111-1,400 GWh, Kim said.

Iljin unveiled the detail of the contract probably to boost its corporate value ahead of a stake sale, some analysts said. After the filing, its stock price surged 12% to close at 78,400 won, far outperforming the wider Kospi’s 2.26% gain.

Iljin has decided to sell the management rights including a 53.3% stake held by its Chief Executive Heo Jae-Myeong, the second son of the parent Iljin Group’s founder and Chairman Heo Jin-gyu. The company recently hired Citigroup Global Markets as its sale manager and sent teaser letters to potential candidates.

Iljin said on Thursday nothing has been decided on the sale.

Write to Byung-Keun Kim and Hyung-Kyu Kim at bk11@hankyung.com
Jongwoo Cheon edited this article.