Skip to content
  • KOSPI 2795.07 -39.22 -1.38%
  • KOSDAQ 920.02 -22.83 -2.42%
  • KOSPI200 371.34 -4.74 -1.26%
  • USD/KRW 1193.6 3.20 0.27%
  • JPY100/KRW 1,049.36 5.20 0.50%
  • EUR/KRW 1,353.54 6.78 0.50%
  • CNH/KRW 188.04 0.39 0.21%
View Market Snapshot
[Exclusive] Battery materials

LG Chem, China’s Huayou Cobalt to build battery metal JV in Korea

Through the third partnership between the two firms, LG aims to secure a stable supply of raw materials amid price hikes

By Jan 05, 2022 (Gmt+09:00)

LG Chem is forming another JV with its Chinese partner Huayou Cobalt
LG Chem is forming another JV with its Chinese partner Huayou Cobalt

South Korea’s top chemical maker LG Chem Ltd. will partner with China’s Zhejiang Huayou Cobalt Co. to launch a battery material joint venture to meet the demand for rechargeable batteries from the burgeoning electric vehicle sector.

According to industry sources on Wednesday, LG Chem’s affiliate LG Battery Core Material, known as LG BCM, and Zhejiang Huayou, the world’s largest producer of refined cobalt, have reached an agreement on the JV to produce cathode, a key ingredient for rechargeable batteries.

The name of the JV and how to split the ownership between the two companies weren’t known, the sources said.

The JV will build a cathode plant in the city of Gumi in South Korea and the factory’s groundbreaking ceremony will be held on Jan. 10, they said.

The construction of the plant, with an annual production capacity of 60,000 tons, the largest for a single factory in Korea, will be completed by 2025, they said.

An LG Chem official said, “Nothing has been decided yet, but various types of partnership and cooperation are under consideration.”

Once completed, LG Chem’s annual cathode output capacity is forecast to more than triple to 260,000 tons by 2026 from 80,000 tons in 2021.

LG has said it plans to spend 475.4 billion won ($398 million) via LG BCM to build a battery material plant in Gumi to secure a stable supply of raw materials and create some 1,000 jobs in the city.

LG Chem's precursor plant in Quzhou, Zhejiang Province
LG Chem's precursor plant in Quzhou, Zhejiang Province

THIRD PLANT UNDER PARTNERSHIP

LG Chem and its Chinese partner Zhejiang Huayou have already built two JV factories in China.

The two companies, which entered into a partnership with the launch in 2018 of their JV, Huajin New Energy Materials, built a precursor plant in Zhejiang Province in 2019, and a cathode plant in Wuxi, Jiangsu Province in 2020.

The precursor is a material created by mixing nickel, cobalt and manganese, and is added to lithium to make cathodes.

The two plants have an annual production capacity of 40,000 tons, respectively.

“The supply-demand bottleneck in the cobalt market and LG’s good relationship with Zhejiang Huayou seem to have led to their third partnership,” said an industry official.

Zhejiang Huayou, for its part, has been actively pursuing acquisitions to cement its leadership in the battery raw materials market.

The Chinese company said in December it is acquiring 100% of a lithium mine in Zimbabwe for $422 million to shore up supply to meet the growing demand for battery mineral resources.

China is tightening its grip on the world’s raw materials market
China is tightening its grip on the world’s raw materials market

CHINA’S TIGHTER GRIP ON SUPPLY CHAIN

LG Chem’s latest partnership with Zhejiang Huayou comes as the Chinese government is tightening its grip on the world’s raw materials market, including metals for EV batteries.

Industry watchers said China is significantly raising the prices of raw materials used to make EV batteries, forcing Korea’s top three battery makers – LG Energy Solution Ltd., SK On and Samsung SDI Co. – to pay higher for key ingredients.

According to data from Korea Resources Corp., cobalt prices rose to $70,195 per ton in December of 2021 from $33,000 in January.

Lithium spot prices stood at 257.5 yuan a kilogram in December, up sharply from 48.5 yuan earlier in the year. The price of lithium is set in the Chinese yuan, not the US dollar, in the global market as Chinese makers are dominant players.

“Korea’s battery-related companies are seeking to form joint ventures with Chinese battery materials producers to secure stable supplies of raw materials under a long-term contract,” said an industry official.

Write to Jeong-Min Nam at peux@hankyung.com

In-Soo Nam edited this article.
Comment 0
0/300