LS Eco partners with Germany's VAC to produce 1,000 tons of EV materials per year

LS Eco Advanced Materials CEO Lee Sang-ho, left, and Vacuumschmelze CEO Erik Eschen pose for a photo after the signing ceremony for a joint venture to produce neodymium. [LS]

LS Eco Advanced Materials, a subsidiary of LS Cable & System (LS C&S), will form a joint venture with the German-based Vacuumschmelze (VAC) to expand its EV component business.

The joint venture, based on a memorandum of understanding (MOU) signed recently, will be built this year and could produce 1,000 tons of neodymium annually, LS C&S said on Wednesday.

The factory is set to begin production in 2027.

Neodymium is a key material for the permanent magnets used in electric vehicle motors, wind turbines and urban air mobility. The capacity produced by this joint venture could cover approximately 500,000 EVs.

The size of the investment and the Korean company's specific stake in the joint venture was not disclosed, with the LS Cable & System spokesperson briefly commenting that the financial details “are still under discussion."

The specific location of the factory also has yet to be revealed.

VAC, established in 1923 in Hanau, is the largest producer of advanced magnetic materials in Europe.

The company has factories based in Germany and Finland. It has been opting to expand its business globally, in line with the shifting EV landscape in Europe and America, to veer away from the influence of China-based components.

The company is also building a North American factory with General Motors to produce rare earth permanent magnets, which is expected to start production in 2025.

LS Eco Advanced Materials is also considering to build a plant in Vietnam that produces rare earth metals.

“LS Eco Energy will start supplying neodymium starting this year, and we are also reviewing to build a plant in Vietnam that produces rare earth metals,” said LS Eco Advanced Materials and LS Eco Energy CEO Lee Sang-ho in a statement. “We plan to build a value chain for rare earth permanent magnets based on LS C&S’ refining technology for nonferrous metals.”

Neodymium demand is rising as the EV market grows. Industry reports project that the neodymium demand will more than double to 400,000 tons per year by 2030 from its current 150,000 tons per year.

Only about 10 factories outside of China produce permanent magnets for EVs.

LS Eco Advanced Materials was established in 2022 when it was split off from LS C&S’ copper-wire business unit. It supplies winding wires for electric motors to Hyundai Motor and Kia, occupying more than 70 percent of the domestic market.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]