LG Chem partners with Huayou Group to build joint LFP cathode plant in Morocco

LG Chem

24/09/2023 02:00

* 
      LG Chem to build joint LFP cathode plant in Morocco with
China's
Youshan
    

        * 
      Company to enter LFP cathode business for the first time
    

        * 
      Company partners with Huayou Group to build 4 facilities
in
Morocco and Indonesia 
    

  
    By Heekyong Yang
       SEOUL, Sept 24 (Reuters) - South Korea's LG Chem Ltd
 051910.KS  said on Sunday it has entered into partnership with
China's Huayou Group's subsidiary Youshan to build a joint
electric vehicle (EV) battery material plant in Morocco in an
effort to diversify its portfolio. 
     The plant, set to start production in 2026, aims to produce
50,000 metric tonnes of lithium-phosphate-iron (LFP) cathode
materials annually, enough to be installed in 500,000
entry-class EVs, the South Korean chemical maker said in a
statement. 
    LG Chem, known for manufacturing more expensive
nickel-cobalt-manganese (NCM) cathodes, is entering the LFP
cathode business for the first time to meet growing demand for
cheaper LFP batteries as the auto industry steps up efforts to
produce more affordable EVs, whose most expensive components are
the batteries.
    LG Chem said LFP cathodes produced at the Morocco plant will
be supplied to the North American market and receive subsidies
from the U.S. Inflation Reduction Act (IRA) as Morocco is a
free-trade partner with the United States. 
    The IRA is designed to wean the United States off the
Chinese supply chain for EVs. It requires at least 40% of the
value of critical minerals used in an auto battery to be sourced
from the United States or a free trade partner to qualify for a
$3,750 tax credit per vehicle. South Korea has a free-trade
agreement with the United States.
    LG Chem and Youshan would need to adjust their respective
equity share in compliance with the U.S. Treasury Department's
guideline of a "foreign entity of concern," a provision aimed at
China, LG Chem said in the statement. 
    The U.S. Treasury Department has not yet provided a precise
definition of "foreign entity of concern" and how it would be
applied.
    LG Chem also announced an additional investment plan with
Huayou Cobalt to build a lithium conversion plant in Morocco,
aiming to start mass production by 2025 with an annual capacity
of 52,000 tonnes of lithium. 
    Furthermore, LG Chem said it plans to build two other
facilities in Indonesia - a precursor plant with an annual
production capacity of 50,000 tonnes and a plant to extract
mixed hydroxide from nickel ore for precursor production. 
    The size of LG Chem's investments for its four facilities
with Huayou Group has not been finalised yet. 
    

 (Reporting by Heekyong Yang
Editing by Shri Navaratnam)
 ((Heekyong.Yang@thomsonreuters.com;))