On September 22, LG Chem signed a comprehensive business agreement with China's Huayou Group on the supply chain of cathode materials.
To enter the LFP cathode market and strengthen the material supply chain, the two companies plan to build an LFP cathode plant and lithium conversion plant (CP) in Morocco and a nickel smelter and precursor plant in Indonesia.
LG Chem and Youshan, a member of the Huayou Group, will build a 50,000-ton-per-year LFP cathode plant in Morocco with the aim of mass production in 2026.
LFP cathode is a battery material mainly used in entry-level electric vehicles, which has a lower energy density than NCM (nickel-cobalt-manganese) cathode, but is increasingly in demand from customers due to its high price competitiveness. The 50,000 tons of LFP cathode is enough to make the cathodes for 500,000 entry-level electric vehicles (based on a 50-kilowatt-hour electric vehicle with a range of 350 kilometers).
The Morocco plant will produce LFP anodes for supply to North America. Morocco is a signatory to a free trade agreement (FTA) with the U.S., and anodes produced there qualify for U.S. Inflation Reduction Act (IRA) subsidies. The companies plan to adjust the equity ratio at a later date in accordance with the IRA's Foreign Economic Operations of Concern (FEOC) provisions. Morocco is the world's top producer of phosphorus ore, a key raw material for LFP cathode materials.
Based on the Moroccan plant, LG Chem plans to enter the full-scale LFP cathode business and expand its business to LMFP cathode, which increases capacity and output by adding manganese to LFP. In Morocco, we will also promote the lithium conversion plant business with Huayou Cobalt, a member of the Huayou Group.
The Moroccan lithium conversion plant will mass-produce 52,000 tons of lithium annually by 2025 and supply lithium to the Moroccan LFP plant.
In addition, LG Chem and Hwayu Cobalt will cooperate to vertically integrate cathode materials, including nickel smelting precursors, in Indonesia under the premise of meeting the IRA. Indonesia is the world's No. 1 country in nickel reserves and production, and is actively promoting the battery manufacturing and electric vehicle industries based on its cost competitiveness.
The two companies will establish a 50,000-ton-per-year precursor plant in Indonesia. They will also discuss establishing a smelting plant to extract nickel mixed hydroxide precipitate (MHP) from nickel ore for precursor production.
"We will use the Morocco anode plant as a global base to actively respond to the emerging LFP anode market," said Shin hak-chul, Vice Chairman of LG Chem.
