S.Korean battery maker LG Chem aims to rely less on Japanese parts amid trade row

Youlchon Chemical

28/08/2019 10:02

SEOUL, Aug 28 (Reuters) - South Korea's LG Chem Ltd
 051910.KS  is pushing for the localisation of some battery
parts in an effort to reduce its dependence on Japan amid a
deepening political and economic feud, its president said on
Wednesday.
    LG Chem, which counts the likes of Apple Inc  AAPL.O  and
General Motors  GM.N  as customers for batteries used in phones
and electric vehicles, is bracing for the possible fallout from
an escalating trade spat with Japan stemming from the latter's
wartime past. 
    Effective Wednesday, Tokyo dropped South Korea from a
so-called "white list" of favoured trade partners, which could
lead to more paperwork and on-site inspection for some Japanese
exporters.  urn:newsml:reuters.com:*:nL3N25O17J 
    Speaking at a battery conference, Kim Myung Hwan, president
of LG Chem, said the company is testing products of South Korean
pouch film maker YoulChon Chemical Co Ltd  008730.KS , citing
uncertainty about Japan imports. 
    LG Chem has relied heavily on Japan's Dai Nippon Printing Co
Ltd  7912.T  and Showa Denko KK  4004.T  for pouches for its
lithium-ion batteries. The combined market share in the global
battery pouch market of the two Japanese companies is about 70%,
according to industry tracker SNE Research. 
    "I expect we wouldn't have any issues with those Japanese
suppliers if they follow the compliance rules, but we are in the
situation where the Japanese government could say different
things if they wanted," Kim added.  
    Changing suppliers will not be easy, however, as it will
take quite some time for LG Chem to run a series of tests and
discuss the matter with clients, said an industry source with
knowledge of the matter. 
    LG Chem's comments came as the South Korean government said
on Wednesday it would invest more than 5 trillion won ($4.12
billion) in research and development for local materials, parts
and equipment between 2020 and 2022.  urn:newsml:reuters.com:*:nL4N25103Z

 (Reporting by Heekyong Yang; Additional reporting by Hyunjoo
Jin; Editing by Muralikumar Anantharaman)
 ((Heekyong.Yang@thomsonreuters.com; +82 2 3704 5647;))