LG Chem produces single-crystal cathodes; to raise $1.5 bn in bonds

LG Chem Ltd. has begun mass production of high-nickel cathode materials made with a single crystal structure for the first time in South Korea, which the company said addresses a pain point for electric vehicle drivers by increasing the safety and lifespan of EV batteries. 

The LG Group arm also is poised to sell global bonds convertible into LG Energy Solution Ltd. shares to raise about 2 trillion won ($1.5 billion), canceling an earlier plan to sell a stake in the majority-owned unit, according to sources with knowledge of the matter last week.

LG Chem said on Monday it has launched production of single-crystal high-nickel cathodes at its Cheongju plant in North Chungcheong Province, about 110 km south of Seoul.

The first output of what the company said is a next-generation cathode material will be delivered to a global battery maker from next month.

Then LG will expand the single-crystal cathode production lines into the Gumi factory in North Gyeongsang Province, about 200 km southeast of Seoul, by 2027. That will bump up its annual output of the new-type cathodes to 50,000 tons by then.

A single-crystal cathode material is made with several metals such as nickel, cobalt and manganese in a one-body structure.

It is touted as a next-generation battery cathode material. It enhances the power and safety of EV batteries and boosts their charging capacity.

By comparison, the conventional cathode material is a polycrystal cathode, in which metals are aggregated into smaller clusters. Fissures are often created with repeated charging and discharging.

The cracks cause gas discharges, which LG said was pointed out as a problem for customers as it reduces the stability of a battery.

“High-nickel single-crystal cathodes will be a game changer in the future battery materials market and a key way to address a customer pain point,” LG Chem Vice Chairman Shin Hak-cheol said in the statement.

In the early years of mass production, single-crystal cathodes will account for 20% of LG’s cathode materials output. It will gradually transform all its cathode producing facilities into single-crystal cathode production lines.

They will be used for both pouch-type and 4680-type cylindrical battery cells, which measure 46 mm in diameter and 80 mm tall.

Meanwhile, LG Chem’s bond issue worth 2 trillion won will be convertible into LG Energy shares, equivalent to a 1.5% stake, according to the sources. It owns 81.84% of LG Energy, the world’s second-largest EV battery maker, as of March of this year.

For its part, LG Energy doubled its global bond issuance last week to 1 trillion won from the originally planned 500 billion won after the bond sale drew 4.7 trillion won in bids, a record high for a South Korean company bond issue.

Write to Mi-Sun Kang at misunny@hankyung.com

Yeonhee Kim edited this article.