LX International seeks to acquire nickel, copper mines in Indonesia

LX International Corp., the trading unit of South Korea’s LX Group, said on Friday it is seeking to acquire a nickel mine and a copper mine in Indonesia as it expands its battery materials business.

During an earnings conference call with analysts earlier on Friday, company executives said LX plans to buy an additional nickel mine following a similar deal last year. It is also seeking to purchase a copper mine in Indonesia for the first time.

LX International, formerly LG International, generates most of its natural resources business revenue from coal production and sales.

Executives said the company is now more aggressively diversifying its business portfolio to promising minerals such as nickel and copper.

While nickel is a key raw material for lithium-ion batteries and stainless steel production, copper is widely used across industries, including as a raw material for electric vehicles, batteries, solar energy, and even in data centers.

Recently, the decline in electric vehicle sales has led to reduced battery production, causing nickel prices to drop significantly.

OPTIMAL TIME FOR A MINE PURCHASE

Industry officials said LX International sees the current decline in nickel mine prices as an optimal investment opportunity.

“In the mid-to-long term, nickel prices are set to rise as EV sales will surely increase.  Demand for stainless steel in China is also growing,” said an LX official.

In January 2024, LX International forayed into the nickel business by acquiring a 60% stake in Indonesian miner PT Adhi Kartiko Pratama (AKP) for 132.9 billion won ($99.8 million) to secure key minerals for secondary batteries.

The PT AKP mine is estimated to have reserves of 36 million tons of mineable nickel – enough to produce batteries for 7 million EVs.

LX plans to raise its annual nickel production volume from the mine to 3.7 million tons by 2028 from 1.5 million in 2024.

Despite worsening market conditions, the mine reportedly turned a profit last year.

“The PT AKP mine is probably the most cost-effective nickel mine in Indonesia,” said an LX executive.

2024 EARNINGS

LX International is also exploring copper mine acquisitions in Indonesia, the Philippines and Australia, sources said.

Meanwhile, the company said in a regulatory filing on Friday that it posted 489.2 billion won in operating profit on sales of 16.64 trillion won in 2024 on a consolidated basis, up 13% and 14.6%, respectively, from the previous year.

The improved performance was driven by increased palm oil and other resource trading, as well as higher maritime freight rates earned by its affiliate LX Pantos Co.

LX International has been shifting its natural resource business focus from coal to EV battery minerals.

In Indonesia, it owns a stake in the Ganda Alam Makmur (GAM) coal mine.

Write to Hyung-Kyu Kim at khk@hankyung.com

In-Soo Nam edited this article.