Tesla supplier L&F to ink $15 bn materials deal in Europe

L&F Co., a South Korean electric vehicle battery materials supplier to Tesla Inc., is set to sell products in Europe through an estimated $15 billion long-term business deal at a time when the industry is suffering slower growth in the global eco-friendly automobile sector.

L&F is seeking to sign a long-term contract to supply hundreds of thousands of tons of its flagship nickel-enriched nickel, cobalt, manganese and aluminum (NCMA) cathodes and new products to a battery cell producer and an automaker in Europe, the world’s third-largest EV market, the South Korean company said on Monday.

“The deal is significant since we will supply not only flagship products but also next-generation items,” said an L&F official.

L&F and the potential customers have almost concluded the terms and conditions for the deal, although the company did not provide details including the names of buyers and values citing a non-disclosure agreement.

The South Korean company is likely to supply cathodes for five years from 2025 in the estimated 20 trillion won ($14.8 billion) deal, industry sources in Seoul said.

LONG-TERM GROWTH

After the announcement, L&F shares ended up 3.1% in the South Korean stock market, far outperforming a 0.7% drop in the junior Kosdaq where the stocks are traded.

L&F is set to secure a stable earnings source for long-term growth through the deal. The battery materials producer has been recently hit by slowing growth in EV sales and falling mineral prices.

The order is also predicted to allow L&F to reduce the risks of volatile earnings through customer diversification. The company made 80% of its revenue from sales to LG Energy Solution Ltd., the world’s second-largest battery maker, and 15% from its smaller rival SK On Co.

L&F aims to cut the reliance on LG Energy to 50% but raise its sales proportion to global automakers to 30%.

Write to Mi-Sun Kang and Hyung-Kyu Kim at misunny@hankyung.com
 

Jongwoo Cheon edited this article.