A new deal by Korean battery manufacturer LG Chem and China’s Huayou Cobalt is expected to set the tone for the lithium-ion battery cathode market.
The two partners have announced a significant deal worth about $440-million to build a 40 000 t/y lithium-ion battery precursor materials plant and a 40 000 t/y cathode plant, in China, over the next 18 months. LG Chem said the plants will be designed with expansion potential 100 000 t/y each.
"It represents a significant development for lithium-ion battery chain, whether the focus is on lithium, graphite, cobalt or nickel, this sets the tone," said London-based MD of consultant Benchmark Mineral Intelligence Simon Moores on social media. He pointed out that it is the world’s most significant deal between raw material miner and lithium-ion battery manufacturer to date and signals a significant move by a battery manufacturer to control such a large cathode manufacturing capacity.
This is confirming fears that present cathode producers are not or cannot not expand quick enough, Benchmark stated in a note to clients on Wednesday.
Under terms of the deal, the partners will form two separate joint-venture companies: Huajin New Energy Material (Quzhou) and Leyou New Energy Material (Wuxi). Huayou has incorporated a new subsidiary Huayou New Energy Technology, which deals with LG Chem directly. Huayou has a 51% in Huajin, with the balance owned by LG Chem. Leyou is also 51%-owned by LG Chem, with Huayou holding the balance.
The announcement states that the plants will be mainly equipped to produce both nickel cobalt manganese (NCM) and nickel cobalt aluminium (NCA) battery assemblies. A decision on this direction or the final NCM to NCA split is yet to be made, but LG Chem is a major producer of NCM batteries for electric vehicles.
