LG Energy, POSCO join forces for EV battery business

LG Energy Solution Ltd. and POSCO Holdings Inc. have joined hands to enhance their competitiveness in the global electric vehicle battery sector and proactively respond to the US EV tax credit act that favors cells with parts made in the country or its free trade partners.

South Korea’s top battery maker LG Energy and major materials producer POSCO last week signed a memorandum of understanding to strengthen their cooperation in the mid- to long-term supply of anode and cathode materials, developing next-generation products and ingredients, as well as battery recycling, according to both companies on Monday.

The agreement came as the US Inflation Reduction Act (IRA) and the United States-Mexico-Canada Agreement (USMCA) are expected to rattle the global battery and materials supply chain.

The US government will require a certain percentage of critical minerals used in EV batteries to come from the US or its partners of free trade agreements such as the USMCA to be eligible for the EV tax credit of up to $7,500 per unit, according to the IRA.

“The strong cooperation will help the two companies maintain their competitiveness despite various issues such as the US IRA,” said LG Energy Chief Executive Kwon Young-soo.

LONG-TERM SUPPLY DEALS

LG Energy shared its plans to procure cathode and anode materials for the next seven years with POSCO. The group provided the battery maker with schedules on the acceleration of capacity expansion in each region to respond to the IRA, as well as its secondary battery materials supply plans.

POSCO and LG Energy aim to sign mid- to long-term contracts for anode and cathode materials supply this year. They will also specify their business and technology cooperation plans in the battery recycling and next-generation anode materials sectors.

“Business cooperation between the two companies will further improve competitiveness in the global battery industry,” said POSCO Group Chief Executive Choi Jeong-woo.

POSCO Chemical Co., the group’s battery materials maker, has been supplying cathode materials and anode materials to LG Energy since 2012.

Write to Kyung-Min Kang at kkm1026@hankyung.com
Jongwoo Cheon edited this article.