Plans to Invest 10 Tril. Won in 3 Growth Drivers
LG Chem has decided to invest six trillion won in secondary battery materials, including cathode materials and separators.
LG Chem announced on July 14 that it will invest 10 trillion won in three new growth drivers by 2025 -- eco-friendly and sustainable businesses, battery materials and new drugs.
LG Chem is planning to concentrate six trillion won on battery materials. "The global battery material market is expected to grow from 39 trillion won in 2021 to 100 trillion won in 2026,” an LG Chem official said. “Performance improvement and cost cutting efforts will be required in the material field."
In the cathode material business, LG Chem will break ground for a production plant in Gumi in December 2021. The plant will have an annual production capacity of 60,000 tons. As a result, its production capacity of cathode materials is expected to climb from 40,000 tons in 2020 to 260,000 tons in 2026. It is also preparing to sign a joint venture (JV) agreement with a mining company to secure a stable supply of metals for cathode materials. It has also decided to strengthen its competitive edge by pushing for cooperation with companies that possess mining and refining technologies.
To strengthen its separator business capabilities quickly, LG Chem is considering taking over companies that have technology and customers or establishing a joint venture with them. The company is also planning to establish overseas bases early. Vice chairman Shin Hak-chul said that the company is studying more than 30 options, including M&A deals, joint ventures and strategic investment.
As for research and development (R&D), LG Chem plans to focus its resources on products such as cathode materials, binders for anode materials and heat-retardant adhesives.
At the same time, LG Chem will more than triple carbon nanotube (CNT) production in the petrochemical business by 2025. Its current output is 1,700 tons per year. CNT is a new material with the same electricity and heat conductivity as copper and diamond, and 100 times as strong as steel.
LG Chem is expected to generate synergies with LG Energy Solution. This is because LG Chem is actively investing in the battery material business this time and LG Energy Solution is expected to receive battery materials from LG Chem. A relationship between the two companies is expected to pay off when raising investment funds of 10 trillion won. "LG Energy Solution will be able to raise the investment funds by having an IPO which will greatly expand LG Chem's investment capacity," Vice Chairman Shin said. "In addition, LG Chem's credibility is high enough as it successfully attracted large amounts of investments when it issues green bonds."
In fact, LG Chem succeeded in issuing US$2.3 trillion worth of bonds in the first half of 2021. It recently issued global green bonds worth US$1 billion. It also issued 820 billion won in ESG bonds and 380 billion won in general corporate bonds in February.
In addition, LG Chem is planning to invest three trillion won in the bio-tech, recycling, and renewable energy materials industries in the petrochemical sector for the purpose of fostering them as future growth drivers. It will become a company with two or more new drugs by 2030 by investing one trillion won in the pharmaceutical sector.