"Return to Management" Ecopro Lee Dong-chae: "If We Continue Like This, There Is No Future" (Comprehensive Report 2)

Former Chairman Lee Leading Joint Venture with GEM
EcoPro Establishes Integrated Anode Material Supply Chain in Indonesia

Lee Dong-chae, former chairman of Ecopro and the largest shareholder of the company, recently discussed cooperation plans with the head of China’s precursor (intermediate raw material for cathode materials) manufacturer, China Ge Lin Mei (GEM). This is Lee’s first business-related activity since his special pardon last month. He has effectively begun the process of returning to management.

"Battery industry has no future if we continue like this"

Lee Dong-chae, former chairman of EcoPro (center), is taking a commemorative photo after discussing cooperation plans for super-gap competitiveness with Heo Gae-hwa, chairman of GEM (right), and Wang Min, vice chairman of GEM (left) at the EcoPro headquarters. Photo by EcoPro

According to Ecopro on the 9th, Lee, who was recently appointed as a standing advisor at a board meeting, held a meeting with employees after returning to management and said, "I thought about why the battery market has become like this and what lies ahead for us, but I could not see a future." He added, "So I decided to overturn the world. If we continue like this, there is no future."

Lee perceives that the NCM (Nickel-Cobalt-Manganese) ternary system, which is the mainstay of K-batteries, is losing market share to lithium iron phosphate (LFP), which is China’s focus, leading to a shrinking market. He diagnosed, "Just two or three years ago, it was expected that all electric vehicle batteries would be ternary systems, so everyone rushed into expansion competition and overinvested." Ecopro stated that Lee recognizes the biggest cause of the chasm was the battery industry ecosystem participants ignoring the fundamental competitiveness of manufacturing along with overinvestment.

He explained that the entire industry fell into a chasm due to insufficient innovation through technology and process development and lack of competitiveness through management efficiency. Lee warned, "If Ecopro remains complacent, it could disappear in three to four years," and presented the card of building an integrated alliance with GEM as a solution to the crisis.

Ecopro to build 'integrated cathode material supply chain' with GEM in Indonesia

Integrated Cathode Material Business Structure of Ecopro and GEM

Ecopro’s strategy is to establish a cathode material value chain in Indonesia to secure future growth engines and competitiveness in battery material prices. Lee recently met with GEM Chairman He Gaehwa at the Ochang headquarters and agreed on a plan to promote a business encompassing the entire cathode material ecosystem in Indonesia.

Through this cooperation, Ecopro will build a value chain covering the entire cathode material ecosystem, from refining to precursor to cathode materials. They especially expect to reduce production costs and drastically lower cathode material prices. GEM has secured world-class competitiveness in nickel refining. A task force (TF) will be formed to carry out practical work with GEM, aiming to finalize the business structure as soon as possible.

According to the company, Lee said at the meeting with Chairman He, "Without disruptive innovation, we cannot overcome the current ‘chasm’ (temporary stagnation in a growth industry). Based on the strong trust built over the past 10 years with GEM, we decided to promote a project in Indonesia to build an integrated system covering refining, precursor, and cathode materials." In response, Chairman He said, "Based on 10 years of cooperation with Lee and Ecopro, we decided to unite as one to overcome the current crisis in the battery material business."

Additionally, plans were made to strengthen the competitiveness of Ecopro Materials, which is responsible for the precursor business within the Ecopro Group. Lee and Chairman He agreed to support Ecopro Materials’ entry into refining and secure nickel resources compliant with the U.S. Inflation Reduction Act (IRA) through GEM’s Indonesian nickel refining plant, ‘Green Eco Nickel.’ Located on Sulawesi Island, Indonesia, ‘Green Eco Nickel’ is a refinery producing about 20,000 tons of nickel annually. In March, Ecopro invested approximately 15 billion KRW to acquire a 9% stake in Green Eco Nickel.

Ecopro and GEM have built a cooperative relationship akin to a three-legged race over the past 10 years. Starting with Ecopro transferring NCA (Nickel-Cobalt-Aluminum) precursor technology to GEM in 2015, they have actively cooperated through equity investment during the establishment of Ecopro Materials in 2017 and recycling technology collaboration with Ecopro CNG.

GEM, established in 2001, is China’s top recycling company with an annual precursor production capacity of 300,000 tons and operates a nickel refinery in Indonesia with a capacity of 150,000 tons.

Ecopro, the holding company of the Ecopro Group, recently held a board meeting and approved the appointment of former chairman Lee Dong-chae as a standing advisor. Ecopro stated that the current management strongly requested Lee’s return to management to overcome the secondary battery crisis and prepare future growth engines. A company official said, "Lee’s unique leadership will greatly help overcome the current secondary battery crisis and lay the foundation for sustainable future growth."