LG Chem will establish a joint venture in China to secure a stable supply and demand system for cobalt, a key raw material for batteries.
LG Chem announced on April 11 that it has entered into a contract to make a precursor and cathode material joint production corporation with Huayou Cobalt of China. Huayou Cobalt based in Zhejiang, China, is the world's largest producer of refined cobalt which produced 20,000 tons of cobalt last year.
LG Chem will establish and run cobalt oil precursor and cathode material joint venture production corporations by investing a total of 239.4 billion won by 2020. The precursor and cathode material are battery materials made from raw materials such as cobalt.
The precursor joint production corporation will be established in Quzhou, Zhejiang Province of China. LG Chem will invest 83.3 billion won to secure a 49% stake. The cathode material joint venture production corporation will be built in Wuxi, Jiangsu Province of China, and LG Chem will own a 51% stake by investing 51.61 billion won.
Each of the precursor and cathode material plants will have a production capacity of 40,000 tons per year, and production will start on a full scale in 2020. The volume of 40,000 tons is enough to manufacture about 400,000 batteries of high-performance electric car which can run more than 320km on one charge. A plan is being considered to scale up capacity to 100,000 tons if demand increases in the future.
In particular, LG Chem said that the agreement would ensure the supply of raw materials such as cobalt from Huayou Cobalt and products produced by the joint venture will also be supplied to LG Chem first. LG Chem explained that the company would be able to build a stable supply system from Huayou Cobalt (raw materials such as cobalt) to joint production corporation (precursors and cathode materials) to LG Chem (batteries).
LG Chem plans to use precursors and cathode materials produced from the joint venture corporation in the Nanjing battery plant in China (production of batteries for small electric cars and ESSs) and its plant in Wrocław, Poland (production of electric vehicle batteries).
"By establishing this joint venture, LG Chem is able to build a strong vertical system that extends from core raw materials to batteries, further enhancing cost competitiveness," said Park Jin-su, vice chairman of LG Chem.