LG Chairman Koo Kwang-mo recently visited a cathode plant to review supply chains and refine production strategies for the battery ingredient, in preparation for the upcoming Korea-US summit. Cathode is a crucial component for rechargeable batteries, constituting around 40% of the cost of electric vehicle batteries.
The Cheongju plant, which is LG’s centerpiece for battery supply chain, produces high-nickel NCMA cathodes made of nickel, cobalt, manganese, and aluminum, which increase power output and enhance stability. LG aims to manufacture 70,000 tons of cathodes at the factory this year, enough to power 700,000 units of pure electric vehicles.
LG Chem, the parent company of LG Energy Solution Ltd., the world’s second-largest battery maker, is also ramping up cathode production globally. The company currently manufactures 120,000 tons of cathodes per year and plans to increase the annual capacity to 180,000 tons by 2024 with the operation of the production line in Gumi, North Gyeongsang Province later this year. This increased capacity would be able to power approximately 1.8 million electric vehicles.
In addition to its existing production facilities, LG Chem has also signed a memorandum of understanding with the Tennessee state government in the US to build a $3.2 billion cathode plant, its first in the US. The plant is expected to produce up to 120,000 tons of cathodes per year by 2027, enough to power 1.2 million pure electric vehicles. LG Chem also plans to build precursor production facilities, a key battery component, in partnership with China’s Zhejiang Huayou Cobalt Co.
These investments are part of LG Chem’s strategy to increase its annual revenue from the lithium-ion battery material business from 5 trillion won in 2020 to 20 trillion won by 2027. LG Group also aims to strengthen the supply chains connecting precursor and cathodes of LG Chem to batteries of LG Energy Solution in the long term.
However, LG is also facing challenges in its battery supply chains due to regulations such as the US Inflation Reduction Act and the European Union’s Critical Raw Materials Act, which require a certain percentage of critical minerals used in EV batteries to come from domestic or free trade partner sources. To address these concerns, LG Chairman Koo has been visiting the group’s battery plants worldwide to refine the supply chain strategy and ensure continued success in the global EV battery market.