Trafigura to invest in S.Korea’s EV cell materials maker

Trafigura, a major global commodity trader, is set to invest in a South Korean electric vehicle battery raw materials manufacturer to take advantage of long-term growth in the clean vehicle industry despite a recent slowdown in the sector.

Korea Zinc Inc., the world’s top lead and zinc smelter, on Thursday inked a deal with Trafigura to jointly invest 185 billion won ($142.5 million) in a nickel smelter in the country built by Korea Energy Materials Co. (KEMCO), the nickel sulfate producing unit of Korea Zinc.

The commodity trader agreed to spend 37 billion won among the total to secure a 12.9% stake in KEMCO, while Korea Zinc was poised to provide the rest to expand its stake in the unit to 64% from the current 35%.

Trafigura signed a separate contract to supply 20,000-40,000 tons of nickel to the smelter a year while securing 20% of the annual nickel sulfate output of the facility. Nickel sulfate, which is a core ingredient for cathodes, one of four key materials for lithium-ion batteries, is made by adding sulfuric acid to high-purity nickel. It can be directly used for cathode material production without separate processing and allows battery makers to shorten production procedures.

“It is significant to cooperate with Korea Zinc in a strategically important project, which shows the importance of metals in energy transition,” Gonzalo De Olazaval, Trafigura’s global head of metals, minerals and bulk commodities, was quoted as saying by Korea Zinc in a statement.

ALL-IN-ONE NICKEL SMELTER

KEMCO is set to spend a total of 506.3 billion won including the investment from Korea Zinc and Trafigura on the plant dubbed all-in-one nickel smelter, which can manufacture all intermediate materials containing nickel for secondary batteries with the mineral.

The smelter with an annual capacity of 42,600 tons of nickel is scheduled to start operations in 2026, increasing KEMCO’s total output to 65,000 tons, the world’s largest excluding China, which would be enough to produce 1.6 million EVs.

KEMCO plans to manufacture other products such as cobalt sulfate and precursors upon customers’ requests to adapt to the US’ policy to exclude Chinese batteries and materials from the EV supply chain.

Korea Zinc aims to develop competitiveness in the nickel business based on its non-ferrous metal smelting technology accumulated in the past 50 years with a goal to seek future growth engines in the EV sector.

“We will become a world leader in the battery material industry with another challenge to prepare for the next 50 years,” said Korea Zinc Chairman Choi Yun B. at the groundbreaking ceremony for the smelter on Wednesday.

Write to Hyung-Kyu Kim at khk@hankyung.com
 
Jongwoo Cheon edited this article.