[Dreaming of Next-Generation Batteries] Battery and Material Production Together... Running Solely Toward Being the 'World's Best'

Establishing Large-Scale Cathode Material Production Plant
Annual Production of 60,000 Tons from 2024
Enough for About 500,000 Electric Vehicle Batteries

Synergy in Sales Growth and R&D with LG Energy Solution

Recycling Precursor Corporation Also Established
Expecting to Strengthen ESG Competitiveness

⑤ Choi Young-min, Head of Battery Development Center, LG Chem

[Asia Economy Reporter Donghoon Jung] "LG Chem is building a cathode active material production plant, a core material for the world's largest electric vehicle battery, in Gumi, Gyeongbuk. Construction began earlier this year, and mass production will start in the second half of 2024, producing 60,000 tons annually, enough for about 500,000 electric vehicle batteries." (Choi Young-min, Head of Battery Development Center)

LG Chem, taking steps toward becoming the "world's largest comprehensive battery materials company," is focused on being "No. 1," "largest," and "best." LG Chem owns LG Energy Solution, a global battery manufacturer with an order backlog exceeding 200 trillion KRW, as its subsidiary.

Choi Young-min, Head of LG Chem's Battery Development Center and Executive Vice President in charge of cathode material development, said, "To become the world's largest materials company, we plan to invest 6 trillion KRW in the battery materials sector alone by 2025, including cathode materials, which are the core of batteries. Although LG Energy Solution is our 'captive market,' the volume of cathode materials and other materials supplied to LG Energy Solution is only a portion, so the potential and growth prospects are very large."

A captive market refers to an internal market between affiliated companies. The parent company LG Chem, which produces materials, and its subsidiary LG Energy Solution, which manufactures finished batteries, benefit from explosive sales growth and synergy in battery materials research and development. LG Chem is targeting markets for cathode materials, which account for 30-40% of battery costs, as well as other key materials such as separators and CNT (carbon nanotube) conductive additives that enhance battery conductivity. The battery materials market is expected to grow rapidly from 39 trillion KRW worldwide last year to 100 trillion KRW by 2026.

The company has recently moved to secure the precursor materials sector, which is the raw material for cathode materials. A precursor refers to the substance just before the final material A is produced through a chemical reaction. In batteries, precursors are compounds mixing lithium oxide, nickel, cobalt, manganese, and other elements that serve as raw materials for cathode materials. LG Chem has decided to establish a joint venture called "Korea Precursor Co., Ltd." with Kemco, a subsidiary of Korea Zinc, in the Onsan Industrial Complex in Ulsan for recycling and precursor production.

Employees at LG Energy Solution's Ochang plant are inspecting electric vehicle batteries.

Choi said, "Through this joint venture, LG Chem has secured a foothold to gain a clear advantage in the rapidly growing eco-friendly battery materials market. By establishing a new precursor supply chain domestically beyond the existing China-centered supply chain, we plan to meet the demands of continuously growing global customers."

Securing the precursor market is also linked to battery material recycling. Choi stated, "In a situation where global regulations on ESG (Environmental, Social, and Governance) are strengthening, recycling within the battery industry is a business that must be pursued. The recycled precursors produced by LG Chem and Kemco's joint venture adopt an eco-friendly wet process that generates no dust during extraction and recycles 100% of wastewater, minimizing harmful emissions. We expect to secure 'ESG competitiveness' in the supply process."

Choi added, "LG Chem plans to establish a closed-loop resource cycle from precursor to cathode material manufacturing through various mid- to long-term external collaborations. Last year, we invested in Li-Cycle, North America's largest battery recycling company, and signed a long-term nickel supply contract." LG Chem plans to build a recycling post-processing line to efficiently recover key metals such as nickel, cobalt, and manganese and reuse them in batteries.

The separator business is also a new materials business that LG Chem is actively fostering. Based on SRS (Safety Reinforced Separator) core technology, LG Chem acquired the coating business from LG Electronics in the second half of last year to establish a foundation for the separator business and recently formed a joint venture with Toray, which has world-class fabric technology, in Hungary. Choi said, "We currently operate coating production lines in Cheongju, South Korea; Hangzhou, China; and Wroclaw, Poland, Europe. We have secured technology to maximize productivity, including processing capabilities that enable the world's fastest separator coating speed." LG Chem expects the internalization rate for cathode materials at LG Energy Solution to increase from the current 30% to about 40% in the future, and for separators to reach about 40% three years after the business expansion begins. In addition to cathode materials and separators, LG Chem plans to expand its battery auxiliary materials business, which plays important roles, including CNT conductive additives, thermal adhesive, and anode binders.