LG Group Chairman Koo Kwang-mo inspected the cathode manufacturing plant of LG Chem, the group's chemical arm, on Tuesday, checking on the company's global supply strategy amid rising demand in the electric vehicle market.
During his visit to the chemical firm's cathode manufacturing plant in Cheongju in North Chungcheong Province, Koo was briefed on the production and global supply strategy, LG said.
“Cathodes are the foundation for securing a competitive edge in the battery business," Koo said. "They are important (for LG) to maintain a leading position in the market and an engine for future growth."
LG Group Vice Chairman Kwon Bong-seok, LG Group President Hong Bum-sik and Lee Hyang-mok, the vice president in charge of the cathodes business at LG Chem, accompanied the chairman.
Koo's visit comes as the US' Inflation Reduction Act and Europe's Critical Raw Materials Act -- both of them aimed at securing stability in supply by reducing reliance on China -- are expected to affect the company's supply.
Koo checked on the company's production plant to come up with preemptive measures to handle potential changes in the market, the company said.
"The battery-related industry is changing fast and shows high volatility. So LG Chem seeks to strengthen its monitoring of the industry overall, and to secure a stable supply chain in advance," LG said.
LG Chem’s factory in Cheongju is the company’s key control tower overseeing the production of an annual volume of 70,000 tons of cathodes, which can be used in about 700,000 advanced EV units -- with a driving range of 500 kilometers. Cathodes are key components that decide the capacity and lifespan of batteries, taking up 40 percent of production cost.
LG's Cheongju plant produces nickel, cobalt, manganese and aluminum cathode materials for next-generation EV batteries. LG concentrates all its technology in the production of NCMA cathode materials, and its products, high in nickel and aluminum, raise batteries' output and stability, the company said.
Combined with other production lines both in Korea and overseas, LG Chem currently produces 120,000 tons of cathodes annually. After its production facility in Gumi, North Gyeongsang Province completes construction and starts operating this year, the company expects to produce up to 180,000 tons of cathodes annually from 2024, LG said. The volume will be used to operate up to 1.8 million units of EVs, the company said.
To meet the rising global demand for cathodes, LG Chem has also been ramping up its production capacity. Last year, the company logged 5 trillion won in sales for battery materials and the company aims to grow the business fourfold to 20 trillion won ($15.17 billion) by 2027.
LG Chem, South Korea's largest chemical firm, also announced last year a plan to invest more than $3 billion in building a battery cathode factory in the US state of Tennessee, to meet the growing demand for US electric vehicle components.
LG Chem's envisioned cathode manufacturing plant in the US would be the country's largest with a production target of 120,000 tons of cathode material a year by 2027 -- a volume that would power 1.2 electric vehicle batteries.
According to SNE Research, a market tracker, the global cathode market will grow to $78.3 billion in 2030, from the 17.3 billion in 2021.
