[Exclusive] LG Chem Also Enters the Copper Foil Market... Pursuing Acquisition of Japan's Nippon Denkaikai

Global 7th Ranked Copper Foil Company Nippon Denkai
Plans 9,500t Capacity Copper Foil Factory in Georgia, USA

LG Chem Adds Battery Material Lineup
Determined to Become Global No.1 Battery Material Company
Foresees Changes in Copper Foil Market Landscape

[Asia Economy Reporter Jeong Dong-hoon] LG Chem is pushing forward with the acquisition of the Japanese battery copper foil manufacturer 'Nippon Denkai.'

LG Chem plans to acquire shares from 'Tex Tech,' the largest shareholder of Nippon Denkai, by the end of next month when Japan's fiscal year ends, securing management rights. As global competition in the battery supply chain intensifies, LG Chem's management is reportedly aiming to complete the acquisition as quickly as possible.

Copper foil is a thin copper sheet that wraps the anode material of electric vehicle batteries. It serves as the path for electron movement and helps dissipate heat generated by the battery to the outside. The core technology lies in spreading copper thinly, widely, and lengthwise, with a thickness only 1/15 that of a human hair. It is known to have high technological and equipment barriers. About 40 kg of copper foil is used per electric vehicle, and as the electric vehicle market rapidly grows, demand for copper foil is also increasing significantly. Demand for battery copper foil is expected to grow nearly sixfold in five years, from 135,000 tons in 2020 to 748,000 tons in 2025, with an average annual growth rate of 40% (SNE Research data).

Nippon Denkai ranks around 6th to 7th globally in copper foil production volume. It currently produces 13,000 tons of copper foil annually, with 9,000 tons in Japan and 4,000 tons in the United States. In July last year, the company announced a $150 million (approximately 194.4 billion KRW) investment to build a new plant in Georgia, USA, with an annual capacity of 9,500 tons. The plant will begin pilot production next year. Due to increasing demand for electric vehicle batteries, expansion is possible to increase production capacity to 28,500 tons. Ten thousand tons of copper foil corresponds to the amount used in 300,000 to 400,000 electric vehicles. However, since the end of last year, local reports have emerged suggesting that the plant's groundbreaking may be postponed due to a global demand slowdown.

If LG Chem acquires Nippon Denkai, it can further strengthen its competitiveness in the battery materials sector. Copper foil will be added to its existing battery material lineup, which includes cathode materials, separators, and anode binders. LG Chem is also conducting research and development on silicon anode materials. The company envisions securing most of the core battery materials to become the 'world's number one global battery materials company.'

This acquisition will change the dynamics of the copper foil market. Large corporations as well as medium and small enterprises are rushing into the market. SKC entered the copper foil market by acquiring KCFT, the world's number one copper foil company, in 2019. Lotte is on the verge of completing the acquisition of Iljin Materials. Korea Zinc and Solus Advanced Materials have also started supplying battery copper foil. With LG Chem, which has financial strength and networks with finished vehicle manufacturers, joining the market, competition in the copper foil market is expected to become even fiercer.

Significant synergy effects are also expected with LG Energy Solution, LG Chem's subsidiary and the world's second-largest battery company. As of the end of last year, LG Energy Solution's order backlog reached 385 trillion KRW. The sources of copper foil supply for LG Energy Solution are expected to diversify. While SK Nexilis, the world's number one copper foil company, has been responsible for supplying copper foil to LG Energy Solution, going forward, various companies including Nippon Denkai will participate in the supply chain.