LG Chem to Pour 240 Bln Won to Secure Stable Supply of Cobalt, Other EV Raw Materials
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LG Chem to Pour 240 Bln Won to Secure Stable Supply of Cobalt, Other EV Raw Materials
Signs deal on establishment of joint venture precursor and cathode joint production operations with Zhejiang Huayou Cobalt

29(Tue), May, 2018


Vice Chairman Park Jin-soo of LChem.



LG Chem will invest 240 billion won to establish a joint venture with the world’s No. 1 cobalt refinery. The move is designed to secure a stable supply of cobalt as one of key raw materials for producing EV batteries. Cobalt prices have surged. LG Chem said on April 11 it signed a deal on the establishment of joint venture precursor and cathode joint production operations with Zhejiang Huayou Cobalt. Zhejiang Huayou Cobalt, based in Zheijiang Province, China, is the global No. 1 cobalt company which produced 20,000 tons of cobalt in 2017. LG Chem will invest a combined 239.4 billion won to set up joint venture precursor and cathode joint production operations with Zhejiang Huayou Cobalt.
The joint venture precursor production operation will be established in Quzhou, Zheijiang Province. LG Chem plans to invest 83.3 billion won to take a 49 percent stake. The joint venture cathode joint production operation will be set up in Wuxi, Jiangsu Province. LG Chem will pour 156.1 billion won for a 51 percent stake. Precursor is a process for producing cathodes by mixing cobalt, nickel and manganese. Cathodes are produced by combining precursor and lithium.
Cobalt, one of the key raw materials for producing cathodes, was forecast to be in short supply starting late 2016, so cobalt prices have rocketed. Market survey company Metal Bulletin, based in London, said cobalt prices surged to $95.6 per kg, a three-fold jump from $32.7 in 2016. It is attributable to the fact that due to political uncertainties, there is a delay in mining and refining investments into cobalt reserves in Democratic Republic of the Congo, which accounts for half of the world’s total reserves.
Cobalt takes up about 10 percent of the unit price of battery production. The latest deal will give LG Chem a guaranteed, stable supply of cobalt from Zhejiang Huayou Cobalt, so it will receive precursors and cathodes from the joint ventures ahead of others. LG Chem has made all-out efforts to secure a stable supply of cobalt and other EV battery raw materials.
Precursors and cathodes from the joint venture will be used for a battery plant in Nanjing, China, and a plant in Wroclaw, Poland. The upcoming joint venture plants, each capable of producing 40,000 tons, will begin in production starting in 2020. The 40,000 ton capacity is equivalent to producing about 400,000 batteries for high performance EVs capable of running more than 320 kg per charging.
The joint venture precursor and cathode plants plan to raise their capacity to 100,000 tons according to a rise in demand.
LG Chem Vice Chairman Park Jin-soo said, “With the establishment of the joint ventures, (LG Chem) will be able to form a vertical integration regime ranging from key raw materials to batteries and to strengthen unit price competitiveness.” LG Chem will devote itself to producing a stable supply of top-notch batteries to customers through continued innovation, he added.


LG Chem is Korea’s Major Exporter Company
LG Chem is Korea’s representative exporter company, earning more than 60 percent of its annual total revenues in international markets. The company, which has production, sales and branch operations in 15 countries, exports basic materials, batteries, information and electronics materials, and life-science-related items to about 160 countries. LG Chem plans to lead global markets with such premium products with a competitive edge as acrylonitrile butadiene styrene (ABS) resin, EV/ESS batteries, polarizing plates, water treatment filters, and hyaluronic acid fillers.
The Basic Material Business Division will continue to invest into such value-added products as ABS, acrylic acid resin/ super absorbent polymer (SAP) as part of its efforts to upgrade its product portfolios.
LG Chem maintains the global No. 1 position in the value-added ABS resin business. The company will pour a combined $100 million into expanding an ABS plant in Huanan, Heilongjiang Province, by the end of this year. It will have a capacity of 300,000 tons by 150,000 tons. The figure will raise to 2 million tons for the company’s combined capacity in Korean and abroad plants. LG Chem has a plant in Yeosu with a capacity of 900,000 tons and Ningbo plant with 800,000 tons. The expansion will allow LG Chem to raise its global market share from current 21 percent to 26 percent to retain the top position.



   
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