Cathode and precursor materials, li-ion batteries: South Korea's LG to cut dependence on China for battery materials
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
On 14 July, LG confirmed a US$5.2Bn investment to expand its battery materials and chemicals business by 2025, covering cathode, anode, separators, and others.
For cathode materials production, LG announced plans to begin construction of a new production plant in Gumi, South Korea in December 2021, with a capacity of 60ktpy cathode materials. The new plant aims to expand LG Chem’s cathode production capacity by almost six times to 260kt in 2026. In addition to expanding cathode material production, a joint venture with a mining company is likely to be formed for cathode precursor materials production, though no details have yet been released publicly.
Driven by the strong downstream demand, LG plans to increase its annual Li-ion battery production capacity to 260GWh in 2023, which would put significant pressure on battery materials supply. Although capable of manufacturing cathode materials itself, the group has been largely relying on external supply of precursor and cathode materials from Chinese companies for its battery production. Roskill believes that enhancing the domestic capacity of battery materials processing and manufacturing would help LG Chem to diversify its supply base, reduce its dependence on China, and take more control of its supply chain. Additionally, it also enables the company to have more control over product quality and optimise its cost structure.
The announcement on cathode materials capacity expansion is part of a larger movement, with South Korea’s government planning a total investment of US$35B by 2030 to leverage its national resources to support the battery industry. However, dependence on China for the processing and supply of battery materials poses a potential risk to continued development of the South Korean domestic battery industry. Roskill’s analysis shows that South Korea imported a total of up to 92.5kt precursor materials from China in 2020, despite setbacks caused by COVID-19 Pandemic, over 12 times that in 2015.
Roskill’s recent research suggests the competition for controlling Li-ion batteries production has intensified among countries, which makes a steady supply chain even more important.
Roskill’s NEW Lithium-ion Batteries: Outlook to 2030, 5th Edition report is now available, and addresses key questions facing the industry.The report draws upon Roskill’s more than 50 years’ of experience in analysing metal and mineral markets, including major battery raw material markets, along with our in-house automotive and lithium-ion battery models.
Roskill’s Cathode and precursor materials: Outlook to 2030, 1st edition report provides analysis on the cathode patent landscape, the precursor-cathode battery supply chain and industry integration, recycling, as well as cost, value and margin.