SK Holdings, the holding company of the SK Group, announced on Nov. 27 that it will invest in a Chinese producer of copper foil, which is a major part of electric vehicle (EV) batteries.
SK Holdings has decided to acquire about 270 billion won in shares of Lingbao Wason Copper Foil Co. to become the second largest shareholder of the Chinese copper foil anufacturer.
Copper foil is a key part of an EV battery that serves to flow current to anode materials
"There are only six companies in the world that are capable of producing high-quality copper foil that meets the standards of global automakers," said SK Holdings. “Lingbao Wason is the only Chinese company among the top six.”
Lingbao Wason, which was established in 2001, has huge potential for growth as it is planning to push for an IPO.
According to SK Holdings, the market for copper foil is expected to grow more than 30 percent annually by 2025 as the global EV market is growing rapidly. .
In addition, the amount of copper foil used for electric cars is 40kg per unit, 10,000 times more than its use for mobile phones (4g per unit). Copper foil prices are likely to rise as global supply cannot keep up with demand growth.
"Global battery giants are scrambling to secure high-quality copper foil. They place orders on leading manufacturers such as Lingbao Wason in advance or push for expensive long-term contracts." said SK Holdings.
Lingbao Wason's performance last year was 340 billion won in sales and 62 billion won in operating profit. It plans to expand its output from 30,000 tons this year to 75,000 tons by 2022.
In particular, Lingbao Wason is the only copper foil manufacturer that is supplying its products to both global and Chinese EV manufacturers.
SK Holdings said its investment in Lingbao Wason is the beginning of its push to create an EV parts and materials business.