Jungang D&M Completes 25 Billion KRW Funding... Full-Scale Entry into Lithium Salt Business

Jungang D&M announced on the 4th that a total of 25 billion KRW in funds has been completed, including a 15 billion KRW paid-in capital increase and a 10 billion KRW convertible bond on the 3rd. Including the previous sale of convertible bonds held by the company, a total of 35 billion KRW in funding has been successfully raised.

The 15 billion KRW paid-in capital increase this time involved Gwangmu, which has been distributing lithium salts in Korea for the past year. Accordingly, synergy is expected with the Jungang D&M-Enchem joint venture that produces lithium salt (LiPF6), in which Jungang D&M will invest in the future. Enchem, the largest electrolyte manufacturer in Korea, plans to lead the lithium salt business, a core material for electrolytes, through the establishment of a joint venture with Jungang D&M.

Currently, the lithium salt business sector, like other secondary battery material industries, is led by Chinese companies, but the de-Chinaization trend is expected to accelerate due to the U.S. Inflation Reduction Act (IRA). Accordingly, the joint venture between Enchem and Jungang D&M plans to lead the North American lithium salt market by leveraging Enchem’s market position and supply chain within the U.S.

The global total lithium salt production capacity is projected to be approximately 280,000 tons this year, about 460,000 tons in 2024, and about 500,000 tons in 2025, while the demand for electrolyte lithium salt in the U.S. and Europe is estimated to be about 160,000 tons by 2025. However, lithium salt produced outside of China is only about 21,000 tons, which is expected to fall significantly short of the demand in the U.S. and Europe.

The joint venture between Enchem and Jungang D&M is known to plan to increase the final lithium salt production capacity to about 100,000 tons targeting the U.S. and European markets. Currently, the largest lithium salt producer’s total production capacity is about 40,000 tons annually, and there are no production facilities exceeding 20,000 tons in countries other than China.

Also, since global lithium salt companies outside of China have very minimal expansion plans until 2025, the joint venture’s plan is expected to be an opportunity to secure a dominant position in the lithium salt market.

Enchem is expected to achieve vertical integration of the electrolyte value chain and stable raw material supply by leading the lithium salt business through Jungang D&M. Furthermore, Jungang D&M is anticipated to play a leading role within Enchem’s electrolyte value chain by leading the global lithium salt business as a new venture.