LG Chem Headquarters Transforms into Battery Materials Company

LG Energy Solution to Produce Battery Finished Products

Parent Company to Focus on Advanced Materials Sector

Vertical Integration of All Battery Processes

Expansion of Cathode Material Production to 170,000 Tons

Sales Expected to Exceed 4 Trillion KRW by 2025

[Asia Economy Reporter Park So-yeon] Koo Kwang-mo, Chairman of LG Group, is strengthening global competitiveness through vertical integration of the battery business. LG Energy Solution, the battery subsidiary of LG Chem which will be spun off next month, will produce finished battery products, while the parent company LG Chem will focus on battery materials. Chairman Koo’s plan is to concentrate on advanced materials, especially battery materials, which have struggled to receive reinvestment due to prior investments in battery cell business, aiming to rapidly enhance competitiveness.

According to industry sources on the 17th, LG Chem plans to increase its cathode material production capacity from 70,000 tons this year to approximately 170,000 tons by 2025 in line with the upcoming spin-off of its battery subsidiary next month. With expanded production capacity, sales currently below 1 trillion KRW are expected to grow to over 4 trillion KRW by 2025. Through this, the internalization rate of cathode materials, a key battery material, is projected to rise from the current 25% level to over 35%.

An LG Chem official stated, "So far, LG Chem’s profits have been reinvested into battery cell manufacturing, which has limited reinvestment in petrochemicals and advanced materials sectors," adding, "After the battery business is spun off, we will actively reinvest profits into petrochemical and advanced materials businesses." Among these, LG Chem plans to particularly nurture battery material sectors such as precursors and cathode materials. Precursors are raw materials for cathode materials. When lithium is combined with precursors, cathode materials, which are core components of secondary batteries, are produced.

LG Chem and its subsidiaries plan to participate in all processes of battery production to maximize profits. While battery cell production is a business area requiring long-term investment, battery materials are considered a sector where investments can yield returns in a short period. With the launch of LG Energy Solution next month, LG Chem will complete vertical integration of the entire battery manufacturing process, spanning precursor production in Quzhou, China, cathode material plants in Wuxi, China, Gumi, and Cheongju, and battery production at LG Energy Solution.

With increased investment capacity following the spin-off of LG Energy Solution, LG Chem has recently been significantly expanding various battery material production facilities. The cathode material production joint venture established with Huayou Cobalt in Wuxi, Jiangsu Province, China, began full-scale mass production at the end of last month. LG Chem invested 156.1 billion KRW in 2018 to acquire a 51% stake in this production company, which has an annual production capacity of 40,000 tons of cathode materials. The precursor joint production company located in Quzhou, Jiangsu Province, also secured an annual production capacity of 40,000 tons and started operations at the end of last month. Next year, a cathode material plant in Gumi with an annual capacity of 60,000 tons is scheduled to be completed. Additionally, LG Chem is expected to begin expanding the Cheongju cathode material plant (annual capacity of 30,000 tons) by doubling its production volume by the end of this year.

An LG Chem official said, "We will continue to expand battery material-related businesses by reviewing additional expansions of existing products and continuously discovering new business items," adding, "Post-spin-off, LG Chem will solidify its top competitiveness in the battery business and enhance profitability in existing businesses to simultaneously grow corporate and shareholder value."

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