Why Use Expensive Copper for the Anode... The Battle of Foil in Big Corporations [Battery Complete Conquest] (24)

Lithium-ion Battery Anode Core
Thin Copper Foil 'Dongbak'
Projected 27% Annual Growth

SK, Lotte, Korea Zinc, and Other
Major Korean Companies Rush to Enter

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Lithium-ion batteries consist of a layered structure of cathode-separator-anode. Among these, the cathode and anode each have active materials thinly coated on current collectors that are a few micrometers (μm; 1 μm = one-millionth of a meter) thick.

The current collector serves as a physical support that fixes the cathode and anode in place. Additionally, it helps dissipate heat generated from the cathode and anode to the outside.

Most importantly, the current collector's primary role is to facilitate the movement of electrons during the charging and discharging processes of the lithium-ion battery. During charging, lithium ions ionize at the cathode, releasing one electron. This electron travels through the cathode's aluminum (Al) current collector, then through the conductor, and finally reaches the anode's copper (Cu) current collector. The electron passing through the copper current collector meets lithium ions at the anode and undergoes a reduction reaction.

The current collector must have excellent electrical conductivity while being stable and non-reactive with the active materials. Although the role is the same, different materials are used for the cathode and anode current collectors due to their electrochemical properties.

The cathode has a higher potential than the anode. Accordingly, the cathode current collector uses aluminum, which has high electrical conductivity and electrochemical stability at high potentials. Aluminum is also abundant and cost-effective.

SK Nexilis Jeongeup Factory. Photo by SK Nexilis

Aluminum cannot be used for the anode in lithium-ion batteries because it reacts with lithium ions to form alloys. Instead, copper, which is stable at low potentials and has excellent electrical conductivity, is used.

The thin copper foil used for the anode is called copper foil. Copper foil was widely used in printed circuit boards (PCBs) but is now more commonly used as the anode current collector in secondary batteries. Thinner copper foil is preferred for batteries because it allows more anode active material to be loaded, increasing energy density.

Copper foil for secondary batteries is manufactured with a thickness of less than 10 μm, which is about 1/15 the thickness of a human hair. For electric vehicle batteries, copper foil with a thickness of 6?8 μm is mainly used. Recently, technology for 4 μm thickness has also been developed.

The key technology for copper foil is producing thin foils with uniform surfaces that do not bend. Higher strength and elongation (the ratio of metal stretching without breaking) are desirable. Since copper foil manufacturing requires advanced process control technology, the entry barrier is high.

The copper foil manufacturing process is broadly divided into roll (roll) rolling and electroplating methods. The roll rolling method produces thin copper foil by passing copper between rollers. This method mainly produces products thicker than 35 μm. While the rolling method yields excellent mechanical properties, it is costly and challenging to produce ultra-thin foils.

Copper foil manufacturing process using electroplating method. Image courtesy of SK Nexilis

The electroplating method uses electrolysis principles to plate copper. It is cheaper and can produce thinner foils than rolling, so it is mainly used for electric vehicle batteries.

In the electroplating method, a platinum anode and a drum-shaped titanium cathode are placed in a copper sulfate aqueous solution, and current is passed through. Copper ions in the solution move to the cathode drum and adhere, forming a thin film. The thickness of the copper foil can be controlled by adjusting the drum's rotation speed and current. The produced copper foil undergoes surface treatment for chemical resistance, heat resistance, adhesion enhancement, and oxidation prevention before being cut and shipped.

"27% Annual Growth"…Major Companies Entering One After Another

Copper foil accounts for about 11% of the weight of lithium-ion batteries. By cost, it accounts for as much as 8%, making it a significant component. SNE Research forecasts that the copper foil market for secondary batteries (including electric vehicles, energy storage systems, and electronic devices) will grow from 360,000 tons in 2022 to 2.07 million tons by 2030, with an average annual growth rate of 27%.

In the past, copper foil was entirely imported from Japan, but in 1990, Iljin Materials commercialized the product and began replacing imports. Since initial facility costs are high, entry is not easy.

Currently, domestic copper foil companies include SKC, Lotte Energy Materials, Solus Advanced Materials, and Korea Zinc, competing in the market. Copper foil production consumes a lot of electricity. Domestic companies are expanding factories mainly in overseas bases such as Malaysia, where electricity costs are low, to reduce production costs.

SKC acquired KCFT in 2019 and renamed it SK Nexilis. KCFT was established after the private equity fund Kohlberg Kravis Roberts (KKR) acquired LS Mtron's copper foil business division. After being incorporated into the SK Group, SK Nexilis rapidly expanded its copper foil business through aggressive investments. In addition to its factory in Jeongeup, South Korea, it plans to expand factories in Malaysia, Poland, and the United States.

The company aims to establish an annual production system of 250,000 tons by 2025 in Korea, Malaysia, Europe, and North America. Its current production capacity is about 80,000 tons annually, including Jeongeup and Malaysia Plant 1.

In 2021, SK Nexilis succeeded in producing the world's thinnest 4 μm thick copper foil with a width of 1.4 meters and a total length of 30 km. The company also possesses technology to produce 6 μm thick copper foil at lengths of 77 km.

Iljin Materials was acquired by Lotte Chemical in March 2023, renamed Lotte Energy Materials, and is aggressively expanding its business with support from the Lotte Group. The company produces 60,000 tons of copper foil annually in Iksan, Jeonbuk, and Malaysia. It plans to expand annual production capacity to about 240,000 tons by 2028 through factory expansions in Malaysia and construction of a plant in Spain.

Solus Advanced Materials originated from Circuit Foil, an electronic materials company established in the United States in 1960. Circuit Foil changed ownership several times before being acquired by Doosan Group in 2014. Doosan launched Doosan Solus in 2019 through a spin-off. In 2020, Solus Advanced Materials was born when a private equity fund, Skylake, led by former Minister of Information and Communication Jindaeje, acquired it.

Solus Advanced Materials produces copper foil used in semiconductors and battery copper foil for secondary batteries. It has the technology to wind over 30 km of 6 μm thick battery copper foil. The company produces 15,000 tons annually of secondary battery copper foil in Hungary. It plans to expand battery copper foil production capacity to 163,000 tons by 2027 through expansions in Hungary and new plants in Canada.

Korea Zinc established a copper foil manufacturing subsidiary, KZAM, in 2020 with 100% investment. KZAM completed a copper foil production plant near the Ulsan Onsan smelter in 2022. The company is currently undergoing customer certification procedures and plans to start mass production in the second half of 2024. The annual production scale is 13,000 tons, with plans to expand to 60,000 tons by 2027.

Fierce Korea-China Competition in Copper Foil

The current secondary battery copper foil market is intensifying competition as Chinese companies aggressively expand production. Chinese companies include Wason, NuoDe, JiaYuan, Jiujiang Defu, and Chang Chun. Korean and Chinese companies such as SK Nexilis, Lotte Energy Materials, Wason, and NuoDe are fiercely competing for the top positions. In Japan, Furukawa and Nippon Denkai supply copper foil.

Market share varies slightly depending on the research firm. According to SNE Research, a domestic market research firm, as of the end of 2021, SK Nexilis held the top spot with a 22% market share, followed by Wason at 19%, Chang Chun at 18%, and Iljin Materials (now Lotte Energy Materials) at 13%. According to QY Research, a market research firm headquartered in Beijing, China, NuoDe ranked first with 12% market share in 2021, followed by SK Nexilis at 9% and Iljin Materials at 8%.

Among them, Wason is the second-largest shareholder with a 30% stake after SK invested 380 billion KRW in two rounds in 2019 and 2020. Wason had a production capacity of 60,000 tons as of 2021. LG Chem also invested 40 billion KRW in Defu in 2021. Defu had a production capacity of about 49,000 tons as of 2021. Wason and Defu are unlisted companies.

The three domestic battery companies source copper foil from multiple companies in Korea and China. LG Energy Solution diversifies suppliers including SK Nexilis, Lotte Energy Materials, Solus Advanced Materials, and Wason. Samsung SDI mainly sources from Lotte Energy Materials and SK Nexilis. SK On uses copper foil from SK Nexilis, Wason, and Chang Chun. Solus Advanced Materials supplies copper foil directly to Tesla.

Korean Copper Foil Companies Adjusting Pace

Although major Korean companies such as SK, Lotte, and Korea Zinc have entered the secondary battery copper foil business one after another, the recent market conditions are unfavorable. Demand has declined due to the slowdown in electric vehicle battery growth, and global inventory has increased significantly as Chinese companies aggressively expand production. Securities firms expect copper foil companies' performance to improve from the second half of 2024.

Copper foil companies, having received poor results in 2023, have started to reduce capital expenditures (CAPEX). Therefore, it is uncertain whether the initially planned expansions will proceed as scheduled.

SKC, the parent company of SK Nexilis, stated in a conference call on February 6 that "This year, we will reduce the scale by about 40?50% compared to last year and strengthen financial soundness through efficient execution." SKC invested 1.5 trillion KRW in capital expenditures in 2023, half of which was used for expanding factories in Malaysia and Poland. With capital expenditures expected to be halved in 2024, copper foil expansion is also expected to face challenges.

Lotte Chemical also said in its earnings conference call on February 7 regarding investment in Lotte Energy Materials, "Considering the recent weakness in the upstream industry, we are proceeding with investments but are taking a more conservative view on timing." It added, "Our mid- to long-term strategies and key projects will proceed without disruption."