LG Chem will lower cathode reliance on Nichia of Japan

LG Chem will reduce its reliance on cathode materials, one of its core batteries, on outside companies. The internalization rate will be increased to 50%.

According to LG Chem's quarterly report on the 16th, the company will expand facility capacity for cathode materials for China by next year. The investment already began early this year. And the total investment is 324 billion won. The Cheongju factory in Korea has been completed in capacity expansion last year with an investment of 79.8 billion won. This was to cope with the stable response to the rapidly increasing battery production, in addition to cost reduction. 

In October 2016, LG Chem took over the cathode material business of GS EM to introduce a vertical integration system for battery core materials. The company also secured precursor technology, another raw material for making cathode materials. But the cathode material produced at the GS EM’s Iksan factory is only 300 tons per year. Last year, LG Chem consumed about 100,000 tons of cathode materials. In order to compensate for the shortage, the proportion of Umicore in Belgium was increased greatly. LG Chem buys 70% of the needed amount from outside companies including Nichia Japan.

This year, the structure is different. Umicore will be the largest cathode material supplier. LG Chem is also expected to raise its internalization rate to account for over 30%. This is thanks to an increase in the volume of production following the operation of the Cheongju factory, which completed the expansion last year. It plans to increase the rate to 50% in the mid to long term.

On the contrary, the proportion of Nichia will gradually decrease inevitably. Nichia has continued to increase its supply of cathode materials from 2012 when LG Vice President Kwon Young-Soo became the Head of LG Chem's Battery Business. It was possible thanks to the good relationship the two made during the period of LG Display. By 2017, Nichia was the largest cathode material supplier.

The cathode material is one of the four raw materials for batteries (cathode material, anode material, separator, electrolyte). It accounts for 35 to 40% of battery cost. LG Chem aims to produce 110 GWh of batteries by 2020. This year's output is 80 GWh, which is twice the amount of last year's 40 GWh.