South Korea’s top chemicals company LG Chem Ltd. has signed a long-term battery materials supply deal with General Motors Co. to support the US carmaker’s goal of 1 million electric vehicle production capacity in North America by the end of 2025.
Separately, the partners also agreed to seek to build a cathode active materials production facility in the US by 2025, LG Chem said in a joint statement on Wednesday.
Details on construction of the cathode plant weren’t available.
The companies also didn’t provide the value of the cathode supply deal, but industry officials estimated it to be as much as 40 trillion won ($30.6 billion), close to LG Chem’s annual sales revenue.
“This agreement builds on GM’s commitment to creating a strong, sustainable battery raw materials supply chain to support our fast-growing EV production needs,” said Jeff Morrison, GM Global Purchasing and Supply Chain vice president.
US Treasury Secretary Janet Yellen (right) shakes hands with LG Chem CEO Shin Hak-cheol during her visit to the LG Science Park in Korea Under the eight-year binding contract, LG Chem will supply more than 950,000 tons of cathode materials to GM from the second half of this year through 2030. That volume is enough to produce about 5 million electric vehicles.
Cathode active materials consist of nickel, lithium and other materials, and comprise about 40% of the cost of EV batteries.
NCMA TYPE
LG’s cathode material is an NCMA (nickel, cobalt, manganese and aluminum) type, which adds aluminum to the NCM type to strengthen stability while decreasing the amount of cobalt used in GM’s previous generation of batteries by 70%.
The battery materials will be supplied to Ultium Cells LLC, a joint venture between GM and LG Energy Solution Ltd., LG Chem’s battery-making unit. Ultium’s battery cell plants are in Warren, Ohio; Spring Hill, Tennessee; and Lansing, Michigan.
GM and LG Energy Solution announce construction of their 2nd Ultium Cells plant in Tennessee LG has been increasing investment to expand its presence in the US with the North American battery market forecast to grow by an average of 58% per year, to 143 GWh by 2023 and 286 GWh by 2025, from 46 GWh this year, according to market researcher IHS Markit.
“Based on close collaboration with our customers, LG Chem will further strengthen its position as a global leader in the market by producing the world’s best cathode materials,” said LG Chem Chief Executive Shin Hak-cheol.
