LG Chem Ltd., South Korea's leading chemical company, said Sunday it has partnered with China's Huayou Group to build four electric vehicle (EV) battery material plants in Morocco and Indonesia amid an acceleration in electrification.
On Friday, LG Chem signed four separate initial pacts with Huayou Group to build a cathode plant for lithium iron phosphate (LFP) batteries and a lithium concentrate-processing facility in Morocco and another two plants in Indonesia -- a nickel-processing plant and a precursor plant, the company said in a statement.
"We will strengthen our presence in the burgeoning LFP cathode market by making the Moroccan cathode plant the global hub of (our) cathode production," LG Chem Vice Chairman and CEO Shin Hak-cheol said in the statement.
LG Chem will complete the vertical integration, ranging from raw materials and precursors to cathodes required for the manufacturing of LFP batteries, to lead the world's battery materials market, he said.
Companies are seeking vertical integration to control the supply chain and multiple stages of their production process, thus eliminating or reducing their dependence on third-party suppliers.
An LFP battery is a type of lithium-ion battery known for its enhanced safety features, high energy density and longer life span.
The lithium-processing and cathode plants in Morocco are expected to begin production in 2025 and 2026, respectively, with the timeframe for the two plants' operations in Indonesia yet to be decided, a company spokesman said over the phone.
The company didn't provide the exact size of the investments in the plants, saying it will be around hundreds of thousands of dollars.
LG Chem said it will have a controlling stake in the investment projects without elaborating.
EV materials produced in Morocco qualify for U.S. tax credits under the Inflation Reduction Act (IRA) as the country is a free trade partner of the United States.
Indonesia is in the process of acquiring the "status of a free trade partner" for the U.S. credits, the spokesman said.
The IRA offers tax credits of up to US$7,500 to each buyer of a new EV only produced or assembled in North America.
To be eligible, vehicles must meet sourcing requirements for both the critical minerals and battery components contained in the vehicle, according to the U.S. Treasury Department.
Beginning in 2024, eligible vehicles may not contain any battery components that are manufactured by a "foreign entity of concern," and beginning in 2025, such vehicles may not contain any critical minerals that were extracted, processed or recycled by such entities, according to the department.
Source: Yonhap News Agency