LG Chem inks deal to secure stable cobalt supplyLG Chem said Wednesday it is building two joint ventures with China’s Huayou Cobalt to ensure a stable supply of cobalt, a core ingredient for lithium-ion batteries.
Rising demand for electric vehicles has naturally increased the demand for batteries, but battery makers have been suffering from a lack of supply of cobalt and a recent price hike.
According to data from the London Metal Bulletin, cobalt prices jumped up from an average $32.70 per kilogram at the end of 2016 to $95.60 in March, largely due to an imbalance in demand and supply.
The Korean battery maker said the partnership will greatly relieve the shortage as the Chinese company agreed to guarantee a stable supply of core battery metals like cobalt.
Huayou Cobalt is one of the largest suppliers of the metal in the world. Last year alone, it produced 20,000 metric tons of refined cobalt.
Under the deal, LG Chem will raise a total of 239.4 billion won ($225 million) by 2020 to establish two joint ventures that produce precursors and cathode materials. Precursors are chemical compounds from which another substance is formed. In this case the precursors, compounds of cobalt, nickel and manganese, will be used to produce the cathode materials.
The precursor-producing joint venture will be built in Zhejiang, on the eastern coast of China, with LG Chem owning a 49 percent stake.
The cathode materials plant will be established in Jiangsu Province with the Korean company owning a 51 percent stake.
The two joint ventures will each produce 40,000 metric tons per year from 2020. LG Chem said it may increase the production capacity to as much as 100,000 metric tons if demand for batteries continues to grow.
LG Chem plans to use the cathode materials produced by the joint ventures at its battery plants in China and Poland. Its battery plant in Nanjing is roughly 180 kilometers (111.8 miles) away from the cathode materials plant to be established in Jiangsu Province.
Earlier this year, steelmaker Posco inked a deal with Huayou Cobalt to establish two joint ventures to produce precursors and cathode materials. They are expected to open in 2020.
BY KIM JEE-HEE [email@example.com]
with the Korea JoongAng Daily
To write comments, please log in to one of the accounts.
Standards Board Policy (0/250자)