South Korean chemical giant LG Chem has partnered with the Chinese business unit of Huayou Group, Youshan, to jointly establish a new battery material factory in Morocco and Indonesia for electric vehicles, Reuters reports.
About the Moroccan battery factory
Huayou’s subsidiary, Zhejiang Huayou Cobalt, separately disclosed plans to co-establish EV battery material factories with LG Chem.
The partners aim to begin production at the Moroccan factory in 2026. It is expected to have an annual production capacity of 50,000 tonnes of lithium-phosphate-iron (LFP) cathode materials. LG Chem stated that this output is sufficient to supply 500,000 base-model electric cars.
LG Chem usually produces expensive NCM (nickel-cobalt-manganese) cathodes. However, it has now decided to add LFP cathode into its portfolio to contribute to the automotive industry’s efforts to lower EV costs.
Morocco World News noted that batteries account for 40% of the vehicle’s total cost on average.
The South Korean company announced that the upcoming LFP cathodes products will go to North America to gain benefit from the US Inflation Reduction Act’s incentives.
For context, Morocco is a free-trade partner with the US, which is necessary for the government incentives qualification. According to the IRA, companies must source at least 40% of the critical battery minerals’ value in the US or its free trade partners. In return, the federal government will provide a tax credit of $3,750 per vehicle.
However, the two companies must adjust their respective equity share to adhere to the US Department of the Treasury’s “foreign entity of concern” standards as soon as the latter releases a specific definition of the term and its applications.
Purpose
Partnering with Youshan for the development of new EV battery material in two different nations is part of LG Chem’s strategy to expand and diversify its product portfolio.
Likewise, Huayou Group and Youshan also aim to expand its presence beyond its home market, China. It will enable them to reach foreign customers and take advantage of local subsidies and incentives.
That said, the partnership will enable the two companies to facilitate international growth with their battery material production in foreign countries and exportation plans.
“We will actively respond to the emerging LFP cathode materials market with the Morocco plant as our global base. Our goal is to create a strong, vertically integrated materials supply chain flowing from raw materials to precursors and cathode materials and solidify our status as the world’s top comprehensive battery materials producer.”
LG Chem CEO Shin Hak-cheol
Three more battery material factories
Apart from the LFP cathode factories, the partners also plan to boost investment for a lithium conversion factory development in Morocco.
They expect to begin mass production at the planned factory as early as 2025 to hit an annual production output of 52,000 tonnes of lithium.
LG Chem further disclosed that the partnership will erect two new Indonesian factories. The first one is a precursor plant that would produce 50,000 tonnes per year. Meanwhile, the second plant will extract mixed hydroxide from nickel ore for precursor production.
See Also:
- Tesla supplier LG Chem partners with Piedmont Lithium for 200,000 metric tons of spodumene concentrate
- LG Chem to spend over $3 billion to construct a battery cathode plant in the US
- LGES to construct new factories across five US states, boosting battery production output by over 55 times by 2027
- Tesla threatens Core Lithium of potential legal case over failed agreement
- China: Lithium prices suffered the largest decline in 2023
LG Chem and Huayou Group’s investment size for the planned four battery material factories is yet to be finalized. Nonetheless, the joint projects will significantly aid their goals to expand in the global market and reach foreign customers to boost their respective profits.
