LG Chem, Korea Zinc affiliate KEMCO to launch battery precursor JV

South Korea’s top chemicals company LG Chem Ltd. and the world’s largest zinc and lead smelter Korea Zinc Co. have agreed to launch a battery materials joint venture to gain ground in the global EV battery value chain.

The JV between LG Chem and Korea Energy Materials Co. (KEMCO), Korea Zinc’s affiliate that produces nickel sulfate, will break ground for a precursor plant next month with an aim to start mass production in the second quarter of 2024, the companies said on Thursday.

With over 200 billion won ($160 million) in investment from the two companies, the JV, tentatively named Korea Precursor Co., will have an annual production capacity of 20,000 tons.

A precursor is a material created by mixing nickel, cobalt and manganese, and is added to lithium to make cathodes. Precursors make up 70% of the expenses of cathode materials, while nickel accounts for more than half of precursor’s ingredients.

LG Chem will own 49% of the JV, while KEMCO will have the remaining 51% stake.

With the launch of the JV, LG Chem said it will be able to stably secure precursor materials for its battery-making affiliate, LG Energy Solution Ltd., the world’s second-largest EV battery producer.

The plant will be built near Korea Zinc’s main factory in Ulsan, southeast of Seoul.

LG Chem said it expects about 400 billion won in sales revenue from the JV in 2025.

The new precursor plant will use metal scraps and recycled metals from used batteries to produce precursors, according to LG Chem.

Write to Jeong-Min Nam at peux@hankyung.com
In-Soo Nam edited this article.