LG Chem is reinforcing its battery materials supply chain by joining hands with China’s Huayou Cobalt to build a precursor plant in Korea. Specifically, the new plant will be located in Saemangeum National Industrial Complex, 230 kilometers southwest of Seoul.
LG Chem signed a memorandum of understanding (MOU) with stakeholders on Wednesday, April 19, in an agreement to invest in a precursor plant in Saemangeum. Investing companies LG Chem and Huayou Cobalt, as well as local parties, including the Saemangeum Development and Investment Agency, Jeollabuk-do, Gunsan-si, and the Korea Rural Community Corporation attended the MOU-signing ceremony.
Invest KRW 1.2 Trillion by 2028
Under the agreement, LG Chem and Huayou Cobalt will establish a joint venture. They will invest a total of KRW 1.2 trillion by 2028 to build a precursor plant in Section 6 of the Saemangeum National Industrial Complex. The new plant will commence construction this year. For the first phase, it will have a 50,000-ton annual production capacity by 2026. Successively, the plant will double its annual precursor production to 100,000 tons with newly added facilities. The company will equip the Saemangeum plant with a metal refiner. This machine is used to produce metal sulfates, which are the key ingredients for precursor production.
The Saemangeum National Industrial Complex is an ideal location for a battery material plant. Mainly, it provides a well-built logistics infrastructure due to its proximity to the Saemangeum port. Additionally, it is an expandable site that spans about 330,000 square-meters — about the size of 46 soccer fields.
Specifically, precursors are compounds consisting of nickel, cobalt, and manganese. They are essential for producing cathodes, which are necessary for electric vehicles (EVs). About 100,000 tons of precursors is enough to make cathodes for more than 1 million EVs that have 75kWh capacity for a 500-kilometer driving range.
Reinforce Supply Chain
Through this investment, LG Chem will become capable of refining metals at home. Consequently, it will help the company expand its precursor production capacity. Further, it will stabilize its raw materials supply amid the evolving situation in the global battery materials supply chain.
“We will reinforce our supply chain through vertical integration of cathode materials by investing in the Saemangeum precursor plant,” said Shin Hak-cheol, CEO of LG Chem. “LG Chem will proactively respond to the global market’s fast pace. We will firmly establish ourselves as the world’s leading battery materials company.”
“We sincerely welcome this large-scale investment by LG Chem, especially made at a time when Saemangeum is becoming a magnet for new investment by companies in the advanced battery sector,” said Kim Kwan-young, Governor of Jeollabuk-do. “Our province will provide full support for the company’s stable settlement and smooth business operations.”
“Also, we will offer our complete support to help LG Chem concrete its position, especially at this new plant at Saemangeum, which aims to become the heart of Korea’s advanced battery industry,” said Kim Kyu-hyeon, Administrator of Saemangeum Development and Investment Agency.