A South Korean instant noodle packet maker has secured a $1 billion deal to supply battery materials to a joint venture between General Motors Co. and LG Energy Solution Ltd. in a move to transform itself into a supplier for the rapidly growing electric vehicle sector.
Youlchon Chemical Co., an affiliate of South Korea’s No. 1 noodle producer Nongshim Co., said on Wednesday it signed a contract with
Ultium Cells LLC. in the US, a joint venture between LG Energy and GM, to supply aluminum pouches from 2023 to 2028.
Youlchon was estimated to provide the pouches for about up to 1 million EVs in the deal, the value of which is near triple its sales of 538.7 billion won ($374.1 million) last year.
“The supply volume could change on the volatility of key materials’ prices and Ultium Cells’ capabilities,” said a Youlchon official without giving further detail.
BASED ON ALUMINUM FILM TECHNOLOGY FOR RAMEN PACKETSThe company is set to supply the pouches made with its own film, a material used for wrapping battery pouches.
The sector has been dominated by Japanese producers such as Showa Denko KK, but Youlchon has been developing the material based on its aluminum film technology for ramen packets since 2019 when Japan regulated exports of key materials for the semiconductor industry and other sectors.
LG Energy also helped Youlchon with support on design and technology for battery pouches while sending research and development personnel.
Youlchon, which produces packets and boxes for
Nongshim’s famous hot and spicy Shin Ramyun and other instant noodles, has been enjoying stable profits through deals with its affiliates. Its contracts with affiliates totaled 110.7 billion won in the first half, about 40% of its total sales.
The dependence was blamed for limiting its growth potential, however, some industry sources said.
The battery material deal is expected to help Youlchon secure a booster for its future growth, reducing its reliance on affiliates, industry sources said.
Write to Ik-Hwan Kim and Hyung-Kyu Kim at
lovepen@hankyung.comJongwoo Cheon edited this article.
