LG Chem and Zhonghu You Group to Build LFP Cathode Material Plant for US Supply in Morocco

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LG Chem is partnering with China's Huayou Group to build an LFP (Lithium Iron Phosphate) cathode material plant in Morocco, a country with a free trade agreement (FTA) with the United States. In Indonesia, they are also moving forward with establishing a nickel refining and precursor plant.

On the 24th, LG Chem announced that it has signed a comprehensive memorandum of understanding (MOU) with China's Huayou Group regarding the cathode material supply chain, marking its full-scale entry into the LFP cathode material business.

Under this agreement, the two companies will pursue ▲ the construction of an LFP cathode material plant and a lithium conversion plant (CP) in Morocco, North Africa ▲ and the establishment of a nickel refining plant and a precursor plant with an annual capacity of 50,000 tons in Indonesia. Through this, they plan to complete vertical integration of cathode material raw materials, from lithium processing to nickel refining and precursor production.

LG Chem and Yushan, a subsidiary of Huayou Group, will establish a joint LFP cathode material plant in Morocco with an annual production capacity of 50,000 tons, aiming for mass production by 2026. LFP cathode materials are battery materials mainly used in entry-level electric vehicles. Although they have lower energy density than NCM (Nickel Cobalt Manganese) cathode materials, they are more cost-competitive, leading to increasing demand from customers. The 50,000 tons of LFP cathode material can produce enough cathode material for 500,000 entry-level electric vehicles (based on 50 kWh capacity vehicles capable of 350 km driving range).

The Morocco plant plans to produce LFP cathode materials to supply the North American market. Morocco is a country that has signed an FTA with the United States. Cathode materials produced here meet the requirements for subsidies under the U.S. Inflation Reduction Act (IRA). The two companies plan to adjust their shareholding ratios once the IRA’s Foreign Entities of Concern (FEOC) regulations are finalized. Morocco holds the world's largest phosphate rock reserves, a key raw material for LFP cathode materials. Approximately 73% (50 billion tons) of the world's phosphate rock reserves are located in Morocco. LG Chem plans to expand its business based on the Morocco plant to include LMFP cathode materials, which add manganese to LFP to increase capacity and output.

On the 22nd, (seventh from the left) Tian Xuehua, Executive Vice President of Huayou Cobalt, and Nam Cheol, Vice President and Head of Advanced Materials Business Division at LG Chem, along with other representatives from both companies, are posing for a commemorative photo after signing a comprehensive Memorandum of Understanding (MOU) on the cathode material supply chain.
[Photo by LG Chem]

LG Chem is also advancing a lithium conversion plant project in Morocco with Huayou Cobalt, a subsidiary of Huayou Group. A conversion plant is a facility that extracts lithium hydroxide and lithium carbonate, essential for cathode material production, from lithium concentrate (high-purity minerals processed from lithium ore). The Morocco lithium conversion plant aims to establish a mass production system of 52,000 tons annually by 2025 and supply lithium to the Morocco LFP plant.

Additionally, LG Chem and Huayou Cobalt will cooperate to achieve vertical integration of cathode materials covering nickel refining and precursor production in Indonesia, subject to meeting IRA requirements. Indonesia is the world’s largest country in nickel reserves and production and is actively fostering battery manufacturing and electric vehicle industries based on cost competitiveness.

The two companies are considering establishing a precursor plant in Indonesia with an annual capacity of 50,000 tons. Furthermore, they plan to discuss building a refining plant that extracts nickel intermediate materials (Mixed Hydroxide Precipitate, MHP) from nickel ore to support precursor production.

Vice Chairman Shin Hak-cheol said, "We will actively respond to the emerging LFP cathode material market by making the Morocco cathode material plant a global hub. We will solidify the vertically integrated material system from raw materials to precursors and cathode materials to strengthen our foundation as the world’s leading comprehensive battery material company."