LG Energy Solution, Proactively Preparing for China's Battery Material Weaponization

[Asia Economy Reporter Park So-yeon] LG Energy Solution (formerly LG Chem Battery Division) has signed a comprehensive memorandum of understanding (MOU) with the Indonesian government regarding nickel mine mining projects and has also signed a contract to supply lithium for eight years from Chilean lithium producer SQM. Industry insiders interpret LG Energy Solution's moves as efforts to diversify battery raw material supply sources. This comes amid concerns that China could weaponize battery raw materials as the global battery dominance battle with Chinese companies like CATL intensifies.

According to major foreign media reports on the 22nd (local time), SQM signed a contract to supply 55,000 tons of battery-grade lithium to LG Energy Solution from 2021 to 2029. SQM stated in a press release that it will supply battery-grade lithium carbonate and lithium hydroxide, key components for producing high-grade cathode active materials used in electric vehicle battery cells.

Earlier, on the 18th, LG Energy Solution also signed an MOU with the Indonesian government related to securing battery raw materials. Although detailed information has not been disclosed, it is reported to involve cooperation such as constructing joint facilities for nickel mine mining in Indonesia and electric vehicle battery production. Industry insiders expect LG Energy Solution to actively cooperate with the Indonesian government to secure battery raw materials.

'K-battery' companies have traditionally relied on China for most of their imports of key battery raw materials such as lithium and cobalt, but recently they have been diversifying their raw material import countries. If the industry's assumption that about 60% of new cars will be replaced by electric vehicles by 2040 becomes a reality, stable procurement of key raw materials, as well as technology and production facilities, will become a decisive factor for future competitiveness from the perspective of battery companies.

Since 2005, China has invested $144.9 billion and $272 billion in South America and Africa, respectively, to pursue resource diplomacy for securing materials such as lithium and cobalt. The Japanese government established the 'Four Major Strategies for Securing Rare Metals' in 2009 and supports trading companies in overseas mine development. In contrast, South Korea's battery companies have world-class technology, but the self-sufficiency rate of battery raw materials is significantly low. Most battery raw materials are imported from China. An industry official said, "There are concerns that China, South Korea's biggest competitor in the battery industry, could weaponize raw materials at any time," adding, "As the battery industry dominance competition between China and South Korea intensifies, crisis situations similar to Japan's semiconductor material export restrictions last year could recur in the battery industry."

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