[Special Stock] Saevitchem and LG Chem Establish 10-Year Long-Term Contract for Battery Recycling System with Triple Expansion

[Asia Economy Reporter Hyungsoo Park] Saevitchem is trading well above its IPO price on its first day of listing.

As of 10:28 AM on the 4th, Saevitchem is trading at 80,700 KRW, up 15.29% from the opening price.

The opening price was set at twice the IPO price of 35,000 KRW. Shortly after the market opened, the price rose as much as 30% from the opening price to 91,000 KRW. Saevitchem recorded a competition rate of 1,670.9 to 1 in the institutional demand forecast conducted earlier. The IPO price was finalized at 35,000 KRW, exceeding the upper limit of the desired IPO price range of 30,000 KRW. Subscription deposits from general investors amounted to 8.075 trillion KRW.

Saevitchem is a company that produces phosphate, a fertilizer raw material, by recycling waste acid generated in semiconductor and display processes. It also operates a business that refines and separates cathode active materials from waste lithium-ion secondary batteries to supply secondary battery raw materials used in electric vehicles.

Last year, the sales ratio by business was 30% from the waste acid recycling division and about 70% from the waste battery recycling division. Sales from the waste battery business surged 115% to 22.8 billion KRW compared to 10.6 billion KRW in 2020. Thanks to the waste battery business, Saevitchem recorded sales of 33.3 billion KRW and operating profit of 5.4 billion KRW last year. Recently, Saevitchem’s three-year average annual sales growth rate is 46%, and operating profit growth rate is 88%. The company stated that it recorded sales of 10.2 billion KRW and operating profit of 3.4 billion KRW in the first quarter of this year, and expects to achieve record-high performance again this year.

CEO Min-gyu Park explained, "Through Saevitchem’s multi-stage leaching technology, we have driven the recovery rate of valuable metals to about 95%. By simplifying the process to manufacture mixed solutions of nickel, cobalt, and others after removing impurities from recycled cathode materials, we have lowered the cost of goods sold ratio to about 68%, which is below the industry average of 88%, thereby improving profit margins."

Saevitchem plans to establish a third factory with the proceeds from this IPO. Starting in 2024, Saevitchem will supply large-scale precursor mixed solutions to LG Chem’s joint venture for 10 years. The production capacity of 6,000 tons will be expanded to 18,000 tons by 2024, more than tripling the current capacity.

From 2028, Saevitchem will additionally develop a solar panel waste business, expecting more than 10,000 tons of waste panels annually. The company aims to continue growing as a global total recycling solution company.

Saevitchem has received approval from LG Chem to supply precursor mixed solutions this year. It signed an MOU to supply precursor mixed solutions for 10 years starting in 2024 with Korea Precursor Co., Ltd., a joint venture between LG Chem and Korea Zinc. The structure involves Saevitchem supplying precursor mixed solutions to Korea Precursor Co., Ltd. using recycled cathode materials supplied by LG Chem, which then supplies them back to LG Chem.

Researcher Se-hwan Hwang from FS Research explained, "By establishing a waste battery cooperation relationship, Saevitchem and LG Chem have built a stable raw material procurement system between them. The expected supply volume corresponds to precursor mixed solutions needed for about 40,000 electric vehicles annually."

He added, "Converted to sales, the company explains it will reach about 100 billion KRW annually. Part of the IPO proceeds will be used for facility expansion." Considering the expected sales of 45 billion KRW this year, this is a significant scale.