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Battery materials

LG Chem to set up separator JV in Hungary with Toray of Japan

To jointly invest over $855 million to produce more than 800 million square meters of separators a year from 2028

By Oct 27, 2021 (Gmt+09:00)

Toray CEO Akihiro Nikkaku (left) and LG Chem CEO Shin Hak-cheol sign an agreement through video conference Oct. 27 to establish LG Toray Hungary Battery Separator Kft JV (Courtesy of LG Chem)
Toray CEO Akihiro Nikkaku (left) and LG Chem CEO Shin Hak-cheol sign an agreement through video conference Oct. 27 to establish LG Toray Hungary Battery Separator Kft JV (Courtesy of LG Chem)

LG Chem Ltd., South Korea’s top chemical maker, has agreed to set up a joint venture with Japan’s Toray Industries Inc. for the production of separators, core materials for secondary batteries, in Hungary to expand its business in Europe.

LG Chem said on Oct. 27 that both companies decided to spend over 1 trillion won ($854.7 million) in phases for the JV, including LG Chem’s initial investment of 647 billion won, to produce more than 800 million square meters of separators a year by 2028. Toray is the world’s third-largest wet separator maker.

They will build a factory on the site of the existing Toray Industries Hungary Kft plant, located in the city of Nyergesújfalu in the Komárom-Esztergom province of northwestern Hungary. The total area is 420,000 square meters, enough space for more than 60 football stadiums. Its construction will begin in the first half of next year.

PROVIDE SEPARATORS TO BATTERY MAKERS IN EUROPE

Separators from the new plant will be supplied to battery manufacturers in Europe,  including LG Energy Solution Ltd.’s Poland plant. The battery maker is 100% owned by LG Chem.

“Hungary’s logistics and transportation are really convenient. The country is also close to LG Chem’s key clients such as global automakers,” a LG Chem official said. “It has favorable geographical conditions to expand our position in Europe and enhance our responsiveness to local customers.”

A separator is one of four core materials use in secondary batteries, along with cathode materials, anode materials and electrolytes.

The JV is expected to help LG Chem rapidly penetrate Europe, one of the world’s top three electric vehicle markets, along with China and the US. It also well places Toray to secure clients in Europe, including LG Energy Solution, that will buy Toray's products for the longer term.

LG Chem and Toray are set to initially each hold a 50% stake in the JV. But the South Korean company plans to acquire 20% from its Japanese partner after 30 months in order to secure management control.

TARGETS EUROPE BY COMBINING LG CHEM, TORAY’S TECHNOLOGIES

LG Chem said it aims to dominate the European market by combining its own coating technology and Toray’s film business capabilities.

“We will actively foster the separator business and endeavor to become the world's No. 1 battery material company,” said LG Chem CEO Shin Hak-cheol.

In July, LG Chem said it plans to invest 10 trillion won in the battery material, renewable and bio sectors through 2025 to strengthen its green business portfolio.

The European EV battery market is expected to grow fivefold to 410 GWh in 2026 from 82 GWh this year, according to global market research company IHS Markit.

In July, LG Chem took over the separator coating business from LG Electronics Inc. for 523 billion won. It currently operates separator plants in Cheongju, South Korea, Hangzhou, China and Wroclaw, Poland, with a total capacity of 1 billion square meters.

The global market for secondary battery separators is forecast to nearly triple to 11 trillion won in 2025 from 4.1 trillion won this year, according to market tracker SNE Research.

Write to Jeong Min Nam at peux@hankyung.com

Jongwoo Cheon edited this article.
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