2023-09-24 11:39:15
South Korean company LG Chem Ltd has entered into a partnership with the Youshan subsidiary of the Chinese Huayou Group to build a joint electric vehicle battery materials factory in Morocco to diversify its portfolio.
Huayou has joined the growing number of Chinese electric vehicle and battery companies looking to expand overseas to be closer to their overseas customers and benefit from local incentives.
In a separate statement, Zhejiang Huayou Cobalt Co, the publicly traded unit of Huayou, said it intends to build factories with LG Chem in Indonesia and Morocco as part of a strategic partnership aimed at promote international growth.
The Moroccan factory, which is expected to begin production in 2026, aims to produce 50,000 tonnes of lithium-iron phosphate (LFP) cathode materials per year, enough to equip 500,000 entry-level EVs, the manufacturer said of South Korean chemicals in a press release.
LG Chem, known for making more expensive nickel-cobalt-manganese (NCM) cathodes, is moving into the production of LFP cathodes to meet growing demand for cheaper LFP batteries as the automotive industry seeks to produce more EVs. affordable, the most expensive components of which are the batteries.
LG Chem said the LFP cathodes produced in the Moroccan factory will be supplied to the North American market and may be eligible for U.S. Inflation Reduction Act (IRA) subsidies, with Morocco being a free trade partner. exchange with the United States.
The IRA aims to wean the United States off China’s EV supply chain.
It requires that at least 40% of the value of critical minerals used in an automobile battery come from the United States or a free trade partner to qualify for a tax credit of $3,750 per vehicle. South Korea has concluded a free trade agreement with the United States.
LG Chem and Youshan are expected to adjust their respective equity stakes in accordance with the U.S. Treasury Department’s directive on “foreign entities of concern,” a provision targeting China, LG Chem said in the statement.
The U.S. Treasury Department has not yet provided a specific definition of the term “foreign entity of concern” or how it would be applied.
LG Chem also announced an additional investment plan with Huayou Cobalt to build a lithium conversion plant in Morocco, aiming to begin mass production by 2025 with an annual capacity of 52,000 tonnes of lithium.
In addition, LG Chem said it plans to build two more facilities in Indonesia – a precursor plant with an annual production capacity of 50,000 tonnes and a mixed hydroxide extraction plant from nickel ore for the production of precursors.
The amount of LG Chem’s investments for its four facilities with the Huayou Group has not been finalized. (Reporting by Heekyong Yang; additional reporting by Samuel Shen in Shanghai; writing by Shri Navaratnam and Barbara Lewis)
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