Korea Development Bank, Korea Mercury Bank, and NongHyup Provide 550 Million Euro Green Loan for LG Chem Battery Plant Expansion

Actively Supporting Future Strategic Industries Amid COVID Crisis
150 Billion KRW Win-Win Growth Fund (KDB-LG Chem) Established to Support SMEs in Materials, Parts, and Equipment Sector

On the 23rd, Korea Development Bank, Export-Import Bank of Korea, and NongHyup Bank signed a Green Loan contract worth 550 million euros with LG Chem at the IR Center of Korea Development Bank headquarters. From the left in the photo: Kwon Woo-seok, Head of Export-Import Bank of Korea; Cha Dong-seok, CFO of LG Chem; Choi Dae-hyun, Vice President of Korea Development Bank; Oh Kyung-geun, Vice President of NongHyup Bank. Photo by XXX

[Asia Economy Reporter Kangwook Cho] Korea Development Bank, Export-Import Bank of Korea, and NongHyup Bank announced on the 23rd that they have signed a Green Loan agreement worth 550 million euros with LG Chem, which is making large-scale investments to strengthen its global competitiveness in the secondary battery sector, a future strategic industry, despite the COVID-19 crisis. A Green Loan refers to a loan system where the use of funds is restricted to eco-friendly sectors such as electric vehicles, renewable energy, and high-efficiency energy.

This Green Loan is the first financial cooperation case since the signing of the $5 billion 'Industry-Finance Cooperation Program for the Development of the Secondary Battery Industry' between KDB and other financial institutions and LG Chem in December 2019. Through this agreement, LG Chem is expected to securely secure investment funds for expanding its battery plant in Poland and smoothly proceed with its plan to significantly increase global electric vehicle battery production capacity to about 100 GWh (equivalent to approximately 1.7 million electric vehicles) by the end of this year.

Starting with the Poland plant expansion project, financial institutions including KDB plan to engage in financial cooperation exceeding $1 billion this year alone, including establishing a joint venture with GM, expanding the China plant, and constructing a new anode material plant in Gumi. They will fully support LG Chem in achieving sales of over 30 trillion KRW in the battery sector by 2024.

In addition, KDB and LG Chem contributed 90 billion KRW and 60 billion KRW respectively to complete the formation of a 150 billion KRW 'Win-Win Growth Fund' last month. After completing consultations to select partner companies eligible for support, full-scale funding support is scheduled to begin through bank branches from the end of this month.

KDB expects that through this, it will alleviate the financial difficulties of partner companies struggling due to the prolonged COVID-19 pandemic while establishing a foundation for all members of the industrial ecosystem, including small and medium-sized enterprises, to share the fruits of growth in the secondary battery sector.

Choi Dae-hyun, Vice President of KDB, said, "This Green Loan is meaningful in that it prioritizes support for future strategic industries over other industries to secure industrial leadership after COVID-19, despite unfavorable conditions in the foreign currency funding market." He added, "Furthermore, through the establishment of the Win-Win Growth Fund, we plan to strengthen financial support for domestic small and medium-sized partner companies in the supply chain of materials, parts, and equipment."

This content was produced with the assistance of AI translation services.