LG Chem-Korea Zinc Jointly Respond to US IRA... New Discovery of Secondary Battery Raw Materials

Discovery of Raw Materials Meeting Inflation Reduction Act Requirements
North America Anode Material Raw Material Supply Cooperation
Mutual Equity Acquisition Worth 257.6 Billion KRW Between Both Companies

Black powder-type cathode material contained in a glass bottle. Photo by LG Chem

[Asia Economy Reporter Choi Seoyoon] LG Chem and Korea Zinc are launching comprehensive business cooperation to lead the future battery materials market.

On the 23rd, LG Chem announced that it signed a comprehensive business cooperation MOU with Korea Zinc to discover raw materials that meet the requirements of the U.S. Inflation Reduction Act (IRA).

Along with this, they agreed to exchange treasury shares worth 257.6 billion KRW to establish a solid strategic partnership.

Business Cooperation in Future Growth Areas Including Discovery of Battery Raw Materials to Comply with the Inflation Reduction Act

The two companies decided to jointly respond to the IRA in the battery materials sector, cooperating to maximize the stability of cathode material raw material supply in North America by jointly discovering metals that satisfy the legislation.

LG Chem has secured industry-leading productivity of over 10,000 tons per production line in the cathode material sector, and Korea Zinc possesses top-tier capabilities in battery metal supply, metal recovery through dry smelting, and high-purity metal manufacturing. Therefore, significant synergy is expected from the cooperation between the two companies.

LG Chem is currently constructing the largest cathode material plant in the U.S. with a capacity of 120,000 tons in Clarksville, Tennessee, while Korea Zinc is accelerating its North American battery materials business by acquiring the U.S. electronic waste recycling company Ignio Holdings last July.

Expected aerial view of LG Chem cathode material plant in Tennessee, USA. Photo by LG Chem

If Ignio supplies minerals such as lithium and nickel obtained through recycling preferentially to LG Chem, it will be possible to establish a battery material supply chain in the U.S. that connects 'recycled minerals - precursors - cathode materials.'

Precursors are raw materials for cathode materials, manufactured by combining nickel, cobalt, manganese, aluminum, and others, accounting for about 70% of the cost of cathode materials.

Additionally, the two companies will positively consider expanding the production capacity of the precursor plant under construction in Ulsan Metropolitan City from the initially planned 20,000 tons to 50,000 tons through their joint venture.

LG Chem and Korea Zinc’s affiliate KEMCO established the joint venture 'Korea Precursor Co., Ltd.' in June and are constructing a precursor plant in the Onsan Industrial Complex, Ulsan Metropolitan City, aiming for mass production in the second quarter of 2024.

Mutual Share Acquisition Worth 257.6 Billion KRW to Strengthen Strategic Partnership

To build a solid strategic partnership and enhance future collaboration execution, the two companies will also conduct mutual share acquisition through treasury share exchange. This capital alliance aims to further solidify the future cooperation system beyond business collaboration.

Korea Zinc will exchange 367,529 treasury shares held by LG Chem (0.47% of total issued shares) with 391,547 treasury shares held by Korea Zinc (1.97% of total issued shares) through off-hours block trading, with a total transaction amount of approximately 257.6 billion KRW.

The transferred shares will have a two-year transfer restriction, and in case of disposal, mutual first negotiation rights will be granted.

Shin Hak-cheol, Vice Chairman of LG Chem, said, “It is significant that two companies with industry-leading expertise are joining forces in future growth sectors such as battery materials, which are expected to see substantial global growth. We will continue to pursue bold business cooperation to achieve greater growth and a better future.”

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