LG Chem to form joint venture with Korea Zinc for battery cathode precursor

LG Chem is planning to form a joint venture with Korea Zinc that will produce precursors for battery cathodes, TheElec has learned.

LG Group chairman Koo Kwang-mo recently med with Korea Zinc vice chairman Choi Yun-birm to arrange for their collaboration, sources said.

The joint venture will be formed within the year at the earliest, with investments in facilities starting next year.

How much stakes the pair will own in the venture is yet unknown but they will have level amounts, the sources said.

The venture’s new production line will likely be built at Ulsan, where Korea Zinc already has existing facilities.

LG Chem’s new planned cathode factory will be built at Gumi, 110km away.

The South Korean chemical firm currently operates cathode factories at Cheongju, South Korean and Wuxi, China. Once the new factory at Gumi is complete, LG Chem will have a global cathode production capacity of 230,000 metric tonnes per year.

This means it will need to procure sufficient amounts of precursors used in the production of cathodes. In China, LG Chem has a joint venture with Zhejiang Huayou Cobalt for precursors. In South Korea, it only has one factory at Iksan to produce precursors and it has no plans to produce them at its plants in Cheongju and Gumi.

The deal with Korea Zinc will also reduce its precursor reliance from China. LG chairman Koo told Korea Zinc’s Choi that LG needs to diversify its suppliers of battery raw materials, the sources said.

The joint venture is also good news for Korea Zinc as it has already entered the copper foil market for batteries. It will also give its advanced material businesses momentum for growth.

LG Chem and Korea Zinc are also considering partnering up for battery recycling business, and is forming the joint venture with this in mind, the sources said.

Cathode accounts for 40% of battery costs, making the precursors needed to produce them an important material for battery makers. The precursors are used when cobalt and lithium are mixed. Data from China’s custom show that its export of precursors for NCM cathode from January to November in 2020 was 81,649 tonnes. This was a 37.2% increase from the same time period a year ago. NCM cathode are mostly used for electric car batteries.