Integrated Supply Network
LS Group has augmented its new investment plan for the Saemangeum National Industrial Complex by an additional 840.2 billion won (US$642.35 million), expanding its initial 1 trillion won commitment. This move signifies LS Group’s resolute endeavor to pursue “full domestic production” in the competitive global precursor market, currently under the dominance of China. Leveraging a collaborative alliance with L&F, LS Group is setting a course towards the establishment of an integrated precursor supply network.
On Aug. 2, LS Group entered into a memorandum of understanding (MOU) with Saemangeum Development and Investment Agency, the North Jeolla Province government, the Gunsan City government and the Korea Rural Community Corp. at the Gunsan Saemangeum Center (GSCO), sealing a formidable 1.84 trillion won commitment to the construction of a secondary battery production facility. This substantial investment complements the earlier 1 trillion won endeavor unveiled in June, which pertained to the collaborative establishment of a joint precursor factory within the Saemangeum National Industrial Complex in collaboration with L&F.
A spokesperson from LS Group said on August 6, “The newly allocated investment of 840.2 billion won will be dedicated to the autonomous establishment of a nickel sulfate production facility.” Nickel sulfate stands as a fundamental ingredient for precursor manufacturing and a precursor is a material used to make cathodes. These cathode materials assume a central role within the intricate framework of battery cell composition.
Embedded within this investment is a resolute ambition to establish Korean-produced precursors, transcending the prevailing hegemony of China within the precursor marketplace. As cited by the Korea International Trade Association, the dependency on Chinese-made precursors surged to a whopping 97.5 percent during the initial five months of this year.
Lately, prominent battery enterprises have been opting for a circuitous approach. Concurrently addressing the constraints imposed by the U.S.’ Inflation Reduction Act (IRA) on Chinese imports and capitalizing on China’s robust precursor manufacturing capacity, these companies are forging partnerships to establish joint precursor production facilities in Korea. In March, SK on and EcoPro teamed up with China’s Green Eco Manufacture to embark on the construction of a substantial 1.12 trillion won precursor factory within the Saemangeum Industrial Complex. Equally noteworthy, LG Chem is poised to erect a formidable 1.2 trillion won precursor production plant in Saemangeum in collaboration with China’s Huayou Cobalt. Meanwhile, POSCO Future M is making strides in establishing a collaborative precursor manufacturing hub in Pohang, North Gyeongsang Province, in tandem with Huayou Cobalt.
In stark contrast, LS Group and L&F are focusing on “independent precursor production.” Choi Su-an, the CEO of L&F, said, “L&F is poised to contribute its expertise in product manufacturing and process intricacies pertaining to precursor production, while LS is set to steer the precursor joint venture through the provision of cutting-edge refining technology for nickel sulfate supply.” This strategic collaboration is orchestrated to establish a seamless supply chain interconnecting nickel sulfate, precursor, and cathode materials. Operating within this framework, L&F functions as an enterprise specializing in cathode materials, while LS leverages its stature as a non-ferrous metal conglomerate.
With mass production slated to initiate between 2025 and 2026, the two firms have set their sights on a production goal of 120,000 tons by the year 2029. LS Group, in particular, envisions the commencement of construction for the precursor manufacturing facility on a vast expanse spanning 338,000 square meters within the Saemangeum Industrial Complex with groundbreaking expected within the current year.