South Korean battery-maker LG Chem has signed a comprehensive memorandum of understanding (MOU) with China’s Huayou Group on September 22 to foray into the lithium phosphate iron (LFP) cathode materials business, the company announced September 24.
LG Chem and Huayou Group plan to jointly enter the LFP cathode material market and strengthen their cathode supply chain. LG Chem said that the two companies will work together to build a total of four facilities, including an LFP cathode material plant and a lithium conversion plant in Morocco as well as a high-pressure acid leaching (HPAL) plant and a precursor plant in Indonesia.
The plant is slated for mass production by 2026 with an annual capacity of 50,000 metric tons and is expected to meet the soaring demand for LFP cathode materials, which is gaining popularity due to their price competitiveness over nickel cobalt manganese (NCM) cathodes. LG Chem estimates that 50,000 metric tons of LFP cathode materials will be enough to be installed in 500,000 entry-class electric vehicles (that come with a 50-kilowatt-per-hour capacity and a 350-kilometer range).
“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.”
Significance: The move to partner Huayou Group is part of LG Chem’s larger strategy to expand its business in the emerging battery business. To this end, the company aims to start vertical integration of its cathode supply chain.
Elaborating on the development, LG Chem said that it will build an LFP cathode material plant in Morocco in partnership with Huayou Group’s subsidiary Youshan.
LFP cathode materials produced at the Morocco plant will be supplied to the North American market and subsidized by the US Inflation Reduction Act (IRA) as Morocco is a signatory to the US Free Trade Agreement (FTA).
With its new plans with Huayou Group, LG Chem will venture into the LFP cathode materials business based on the Morocco plant and expand the business into lithium manganese phosphate iron (LMFP) cathode materials, a mixture of manganese and LFP that provides more capacity and better output than LFP cathode materials.
The South Korean company also aims to promote the lithium conversion plant business with Huayou Cobalt in Morocco.
In addition to the plants in Morocco, LG Chem and Huayou Cobalt have agreed to cooperate in Indonesia, which is actively promoting the battery manufacturing and EV sector based on its cost competitiveness as it has the world’s largest nickel reserves and production. The two companies plan to work together for the vertical integration of the cathode materials supply chain, ranging from HPAL to precursor production, to meet the IRA standards.
The two companies are also considering the establishment of a precursor plant in Indonesia with a production capacity of 50,000 metric tons per year. According to the note, the two companies will also discuss the construction of a plant to extract mixed hydroxide precipitate (MHP) from nickel ore for precursor production.
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