LG Chem with China's Huayou to make battery materials in Indonesia, Morocco (updated)

LG Chem

24/09/2023 12:39

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      LG Chem to build LFP cathode plant with China's Youshan
    

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      Company to enter LFP cathode business for the first time
    

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      Partners with Huayou Group to build 4 facilities
    

  
 (Adds Huayou's statement, context, paragraphs 2,3)
    By Heekyong Yang
       SEOUL, Sept 24 (Reuters) - South Korea's LG Chem Ltd
 051910.KS  has entered a partnership with China's Huayou
Group's subsidiary Youshan, it said on Sunday, to build a joint
electric vehicle (EV) battery material plant in Morocco to
diversify its portfolio.
    Huayou has joined the growing number of Chinese electric
vehicle and battery companies seeking to expand overseas to get
closer to their foreign clients and benefit from local
incentives. 
    In a separate statement, Huayou's listed unit Zhejiang
Huayou Cobalt Co  603799.SS  said it intended to build plants
with LG Chem in Indonesia and Morocco under a strategic
partnership to promote international growth.
    The Morocco plant, set to start production in 2026, aims to
produce 50,000 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 to meet growing demand for cheaper LFP
batteries as the auto industry seeks 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 could be eligible
to 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,
with the aim of starting mass production by 2025 with an annual
capacity of 52,000 tonnes of lithium. 
    In addition, 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.

 (Reporting by Heekyong Yang; additional reporting by Samuel
Shen in Shanghai; Editing by Shri Navaratnam and Barbara Lewis)
 ((Heekyong.Yang@thomsonreuters.com;))