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Tuesday, July 23, 2024

Koo Kwang-mo visits LG Chem plant amid global battery supply uncertainties

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LG Corporation Chairman Koo Kwang-mo, right, inspects a cathode production facility at LG Chem's plant in Cheongju, North Chungcheong, on Monday. [LG CHEM]
LG Corporation Chairman Koo Kwang-mo, right, inspects a cathode production facility at LG Chem’s plant in Cheongju, North Chungcheong, on Monday. [LG CHEM]

LG Corporation Chairman Koo Kwang-mo visited LG Chem’s domestic battery material plant as the company braces for the new U.S. battery sourcing rules amid global supply chain uncertainties.

LG Corporation on Tuesday said that Koo paid a visit to LG Chem’s battery cathode material plant in Cheongju, North Chungcheong, on Monday, to inspect the site and check on the production status.

The LG chief’s visit is aimed at ensuring supply chain stability amid strong electric vehicle (EV) demand, as new battery sourcing rules — such as the U.S. Inflation Reduction Act (IRA) and the European Union’s Critical Raw Materials Act — are reshaping the global supply chain.

“Cathode materials serve as a foundation for the battery business’s market competitiveness and also as another future growth driver,” said Koo, stressing that “it is important to maintain the leading position.”

LG Chem is 30.06 percent owned by LG Corporation, its largest shareholder, as of December 2022.

The company’s Cheongju plant produces 70,000 tons of cathode materials a year, which are enough to manufacture batteries for 700,000 all-electric cars. The plant accounts for over half of LG Chem’s total production capacity of 120,000 tons a year.

The plant produces cathode materials for high-nickel EV batteries, namely NCMA — nickel, cobalt, manganese and aluminum-based — batteries.

Cathode materials, one of the core component of EV batteries, take up over 40 percent of a battery’s production cost, and determine the end product’s lifespan and performance.

LG Chem is currently building another cathode materials production facility in Gumi, North Gyeongsang. If the construction is completed this year as planned, the combined production capacity of LG Chem is expected to reach 180,000 tons a year by 2024.

As Koo will accompany President Yoon Suk Yeol during Yoon’s visit to the United States in late April, the latest move signifies the company’s effort to secure a stable battery production capability in response to the global supply chain reformation.

In a similar move, LG Chem said Monday that it will build a $910 million (1.2-trillion-won) battery precursor plant in Gunsan, North Jeolla, with China’s Zhejiang Huayou Cobalt, to qualify for up to $7,500 in subsidies the U.S. government offers through the IRA program.

In order to qualify for half of the $7,500 tax credit, 40 percent of the critical-mineral value of a vehicle’s battery has to come from the United States or countries with which the United States has signed free trade agreements.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]