LG Chem Vice Chairman Shin Hak-cheol: "Revolutionary Change in Secondary Batteries"... Becomes Reality in One Year (Comprehensive)

Advanced Materials Division Achieves Record High Sales for Second Consecutive Quarter
Expansion of Production Facilities in Response to Soaring Anode Material Demand
Electric Vehicle Market on Track... Stable Customer Base Including Battery Leader LG Energy Solution Secured

Vice Chairman Shin Hak-cheol of LG Chem delivering a greeting at the agreement ceremony for the secondary battery industry promotion industry-finance cooperation program held in December 2019 at Magok LG Science Park, Gangseo-gu, Seoul. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Choi Seoyoon] "The most innovative change in LG Chem's history, which will elevate the company to a higher level, has already begun. Visible results will be confirmed from the second half of this year." (July 2021, Shin Hak-cheol, Vice Chairman of LG Chem)

The 'secondary battery materials' bet launched by Shin Hak-cheol, Vice Chairman of LG Chem, is showing performance results just one year later. The advanced materials business division, responsible for secondary battery materials, entered the 1 trillion KRW sales club in Q1 this year and surpassed 2 trillion KRW in sales in Q2. Last July, Vice Chairman Shin announced his plan to transform LG Chem, which had been focused on petrochemicals, into the "world's number one comprehensive battery materials company." The move to aggressively invest 6 trillion KRW and redefine its identity as a secondary battery materials company is expected to accelerate.

According to the industry on the 2nd, among LG Chem's three main business divisions?petrochemicals, advanced materials, and life sciences?the advanced materials division's Q2 sales reached 2.018 trillion KRW, a 56% increase compared to the previous year. This is also a 29% increase compared to the record-high sales of 1.568 trillion KRW in Q1 this year.

The advanced materials division is divided into ▲ cathode materials and other secondary battery materials ▲ IT and semiconductor materials ▲ engineering materials ▲ others. The proportion of cathode materials in advanced materials sales was 57% in Q2 this year, nearly doubling in one year and leading the performance growth. While the rise in prices and shipment volumes of cathode materials, a core secondary battery material, contributed, LG Chem's ability to meet the explosively increasing demand for cathode materials was possible because it had actively expanded cathode material production capacity for at least two years.

Kim Hyuntae, a researcher at BNK Investment & Securities, said, "Cathode material companies share future volume plans with battery cell companies and expand cathode material production accordingly. Since building production plants takes about two years, investments should have started around 2020 to contribute to first-half results this year." He added, "When Vice Chairman Shin said last July that he would grow the company into a comprehensive battery materials company, LG Chem's advanced materials division was already aggressively expanding cathode material production."

In fact, LG Chem began commercial operation of its cathode material plant in Wuxi, China, in October 2020, and in December of the same year, started expanding the fourth cathode material plant in Cheongju, aiming for operation this year. One previously built production line is currently partially operational. In July last year, LG Chem acquired the Chemical & Electronic Materials (CEM) division, which was responsible for secondary battery separators at LG Electronics, for 525 billion KRW. As a result, LG Chem's cathode material production capacity increased from 40,000 tons in 2020 to 80,000 tons in one year, with targets of 90,000 tons this year and 260,000 tons by 2026.

LG Energy Solution, the top domestic battery company, is a subsidiary, which also provides significant benefits. Choi Kyuhun, a researcher at Shinhan Financial Investment, explained, "With the electric vehicle market on a growth trajectory, LG Chem already has a major customer in LG Energy Solution. By expanding customers externally, including the US's top automaker GM, it is delivering outstanding performance compared to competitors."

Since Vice Chairman Shin Hak-cheol took office, LG Chem has thoroughly focused its management strategy on future new growth engines. Earlier, Koo Kwang-mo, Chairman of LG Group, appointed Vice Chairman Shin at a time when LG Chem was expanding its business areas from petrochemicals, its 'cash cow,' to batteries and new materials. Transforming the company into a future-oriented entity is Vice Chairman Shin's destiny. Based on Chairman Koo's trust, Vice Chairman Shin announced a historic investment plan of 10 trillion KRW within three years of his appointment. He decided to invest 6 trillion KRW in secondary batteries and electric vehicle materials by 2025. More than half of the 10 trillion KRW will be poured into the advanced materials business.

Already, capital expenditures (CAPEX) have increased tenfold in the past year. CAPEX for the advanced materials business in Q2 this year was 612 billion KRW, a sharp increase of 554 billion KRW compared to 58 billion KRW the previous year. At the end of last month, LG Chem announced plans to build a fourth carbon nanotube (CNT) plant with an annual capacity of 3,200 tons at the Daesan plant in Chungnam by 2024. CNT, known as a next-generation material, is used in electric vehicle batteries, automotive electrocoating exterior materials, and more. An LG Chem official said, "We cannot disclose the exact investment amount, but it is expected to be several hundred billion KRW. We plan to supply it as a cathode conductive additive to battery companies, including LG Energy Solution."

Supported by additional expansions, LG Chem's secondary battery materials are expected to continue rapid growth. IBK Investment & Securities analyzed, "Sales of secondary battery materials within the advanced materials division are expected to reach 8.4 trillion KRW by 2026, maintaining an average annual growth rate of around 40% over five years. Considering LG Chem's goal to maintain market share, further increases in cathode material production capacity are anticipated."

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