Aiming to Overtake Japan's Sumitomo
Korean companies are expanding their presence in the global cathode materials market. Cathode materials are a major strategic item that accounts for 40 to 50 percent of electric vehicle (EV) battery costs. Analysts say that Korean companies are closely trailing Japan’s Sumitomo, the world's largest cathode materials producer.
Korea’s leading cathode material companies, including LG Chem, POSCO Chemical, EcoPro BM and L&F, posted stellar business performances last year.
LG Chem racked up 8 trillion won in sales in the high-tech materials sector, including cathode materials, up 67 percent from the previous year. Its total operating profit in this sector inflated 291.1 percent to reach 923 billion won. Meritz Securities estimated the company’s cathode material-related operating profit at around 700 billion won.
POSCO Chemical posted 150.2 billion won in operating profit in the battery material business in 2022, up 287.1 percent from the previous year. Its total operating profit hit 165.9 billion won last year. Hana Securities forecast that the company’s cathode materials sales would hit 4,525 billion won in 2023.
EcoPro BM posted the best ever business performance last year, with its sales and operating profit hitting 5,356.9 billion won and 382.5 billion won, respectively. The company's sales and operating profit jumped 260.6 percent and 232.5 percent, respectively, from 2021.
Analysts estimate that the combined cathode materials-related operating profits of all Korean companies reached around 1.5 trillion won last year, a new record high.
Experts say that it is difficult for latecomers to catch up front-runners in the cathode material industry because production of cathode materials requires high technologies. Automobile companies such as GM and Ford strengthen cooperation first with cathode material companies along with battery companies.
Market research firm SNE Research predicts that the global cathode materials market will grow from US$17.3 billion in 2021 to US$78.3 billion in 2030.
A 2019 survey showed that Japan’s Sumitomo held a 42.6 percent share and Korea’s EcoPro BM 16.7 percent in the global cathode material market. However, Korean companies are rapidly catching up with Sumitomo through large-scale investments and facility expansion.
Recently, LG Chem and POSCO Chemical made notable moves. LG Chem announced in November 2022 that it would spend more than US$3 billion in building a cathode materials plant in Clarksville, TN, the United States, and secure an annual production capacity of 120,000 tons.
Recently, LG Chem selected JD Dunn, a leading construction company in the United States, for the construction of the plant. It plans to break ground for the plant in March. It plans to increase cathode material production by 50 percent in 2023 compared to the previous year.
POSCO Chemical announced on Jan. 30 that it signed a contract to supply cathode materials worth 40 trillion won to Samsung SDI until 2032. It was the largest deal in the company's history. In addition, a cathode material plant with an annual capacity of 90,000 tons will begin operation in Gwangyang, South Jeolla Province, this year. A first-phase cathode materials plant in Pohang, North Gyeongsang Province, with an annual capacity of 30,000 tons, is scheduled to be completed this year.