LG Chem will make inroads into the lithium-phosphate-iron (LFP) cathode materials business in partnership with China’s Huayou Group. In addition, LG Chem will start vertical integration of its cathode supply chain.

Specifically, LG Chem and Huayou Group signed a comprehensive memorandum of understanding (MOU) last Sept. 22. In the agreement, they will jointly enter the LFP cathode material market and strengthen their cathode supply chain. Collectively, the parties will work together to build a total of four facilities. This includes an LFP cathode material plant and a lithium conversion plant in Morocco. It also includes a high-pressure acid leaching (HPAL) plant and a precursor plant in Indonesia.

“We will actively respond to the emerging LFP cathode material market with the Morocco plant as our global base,” said LG Chem CEO Shin Hak-cheol. “Our goal is to create a strong, vertically integrated material supply chain — flowing from raw materials to precursors and cathode materials — and solidify our status as the world’s top comprehensive battery materials producer.”

Meet Soaring Demand for LFP Cathode Materials

LG Chem and Huayou Group’s subsidiary Youshan will build an LFP cathode material plant in Morocco, which sits on the largest reserve of phosphate rocks. The plant is slated for mass production by 2026 with an annual capacity of 50,000 metric tons. Mainly, it aims to meet the soaring demand for LFP cathode materials. These materials are gaining popularity due to their price competitiveness over nickel-cobalt-manganese (NCM) cathodes. About 50,000 tons of LFP cathode materials are enough for a 500,000 entry-class electric vehicle (50-kilowatt-per-hour capacity and 350-kilometer range).

Mainly, the companies will supply the LFP cathode materials produced at the Morocco plant to the North American market. It will be subsidized by the U.S. Inflation Reduction Act (IRA) as Morocco is a signatory to the U.S. Free Trade Agreement (FTA). LG Chem and Youshan are to adjust their share in compliance with the Foreign Entity of Concern (FEOC) regulations of the IRA.

Additionally, LG Chem will venture into the LFP cathode materials business based on the Morocco plant. Subsequently, it will expand into lithium-manganese-phosphate-iron (LMFP) cathode materials. These materials are a mixture of manganese and LFP, which provide more capacity and better output than LFP cathode materials.

Also, LG Chem will promote the lithium conversion plant business with Huayou Cobalt in Morocco. A conversion plant is a facility that extracts lithium hydroxides and lithium carbonates, both of which are essential for producing cathode materials from lithium concentrates. The lithium conversion plant is expected to mass produce 52,000 tons of lithium annually by 2025, and supply that to the LFP plant.

To Built Precursor Plant in Indonesia

In addition, LG Chem and Huayou Cobalt agreed to cooperate in Indonesia, which is actively promoting the battery manufacturing and electric vehicle sector based on its cost competitiveness. Indonesia has the largest nickel reserves and production. Both companies will work together for the vertical integration of the cathode materials supply chain. It encompasses HPAL to precursor production; thus meeting the IRA standards.

The companies are also considering the establishment of a precursor plant in Indonesia with a production capacity of 50,000 tons per year. They will also discuss the construction of a plant to extract mixed hydroxide precipitate (MHP) from nickel ore for precursor production.