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Battery Producers Sign Long-term Contracts with Anode Material Suppliers
Preparing for Rapid Expansion of EV Market
Battery Producers Sign Long-term Contracts with Anode Material Suppliers
  • By Jung Min-hee
  • February 6, 2020, 09:43
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Anode material products from POSCO Chemical

Battery material suppliers and battery manufacturers are forming long-term partnerships one after another with the global electric vehicle battery (EVB) market expanding at a rapid pace.

LG Chem and SK Innovation, the two largest EVB manufacturers in South Korea, have signed long-term supply contracts with anode material suppliers since last year. For example, LG Chem signed a supply contract for 125,000 tons of anode materials with Umicore in September last year. The Belgian company is the largest player in the industry and the contract amount allows the manufacturing of batteries for use in more than one million high-performance EVs. More recently, LG Chem and POSCO Chemical concluded a three-year contract worth 1,853.3 billion won.

Likewise, SK Innovation recently signed a 2.7 trillion won contract with EcoPro BM. The latter is going to build a dedicated plant to meet the supply schedule. “Battery producers conclude long-term anode material supply contracts because the materials take up the largest portion, more than 40 percent to be exact, in the raw material cost of an EVB, and they require a very high level of technological expertise,” said an industry expert.

At present, a very small number of companies are capable of producing anode materials. They include POSCO Chemical, EcoPro BM and L&F in South Korea and Sumitomo and Nichia in Japan.

The global anode material production volume, which totaled somewhere between 400,000 tons and 500,00 tons last year, is forecast to increase to up to 3.5 million tons in 2025. In addition, the size of the global market is expected to grow from US$9.1 billion to US$29.6 billion from 2018 to 2025.