Korea’s L&F in $2.9 billion deal to supply battery material to Tesla

South Korea’s leading battery materials maker L&F Co. said on Tuesday it has signed a $2.91 billion deal to supply cathode, a key electric vehicle battery material, to Tesla Inc.

L&F said in a regulatory filing that it will provide high-nickel cathode to Tesla and its affiliates for two years from Jan. 1, 2024 through Dec. 31, 2025.

The value of the deal was calculated based on L&F’s recent cathode sales price and is subject to change depending on the fluctuation in lithium prices, the company said.

Shares of L&F surged as much as 19% to 285,000 won on the junior tech-heavy Kosdaq market earlier on Tuesday following the announcement of the deal. At that share price, L&F replaced Celltrion Healthcare Co. as Kosdaq’s second-largest stock.

The Tesla deal’s value is tantamount to L&F’s estimated 2022 sales revenue of 3.88 trillion won.

“Judging from the deal size, Tesla will likely have secured enough high-nickel cathode materials for 300,000 EVs annually for two years,” said Hana Securities analyst Kim Hyun-soo.

AMONG KOREA’S BIG THREE

Established in 2000, L&F is one of Korea’s big three cathode materials makers. The other two are EcoPro BM Co. and POSCO Chemical Co.

Cathode materials are made up of nickel, lithium and other materials, and comprise around 40% the cost of electric vehicle batteries.

L&F is one of the few battery materials makers that can mass produce nickel, cobalt, manganese and aluminum (NCMA) cathode. The company is also capable of producing the NCM cathode with high-nickel content.

The company is 14.4% owned by its largest shareholder Seronics Co., a Korean air purifier filter and LCD backlight unit maker. Huh Je-hong, a fourth-generation member of the GS Group owner family, is Seronics’ chief executive as well as chairman of L&F’s board of directors.

Posting an operating profit of 266.2 billion won last year, L&F also supplies cathode active materials to Korea’s three major lithium-ion cell manufacturers – LG Energy Solution Ltd., SK On Co. and Samsung SDI Co.

Write to Kyung-Min Kang at Kkm1026@hankyung.com

In-Soo Nam edited this article.