A joint venture between LG Chem Ltd. and Korea Zinc Inc. is slated to start the mass production of precursor, a key electric vehicle battery material, in the near term as its facility is in test operations, in a move to help customers conform to US requirements for clean car federal tax benefits.
The joint venture Korea Precursor Co. established in August 2002 succeeded in manufacturing a precursor prototype two weeks after the test operations of its plant, which was completed last month, Korea Zinc said on Wednesday.
South Korea’s top chemicals company LG Chem and Korea Energy Materials Co. (KEMCO), the affiliate of the world’s largest zinc and lead smelter Korea Zinc, invested 200 billion won ($144.6 million) for
the joint venture with precursor capacity of 20,000 tons a year. LG Chem is the parent of LG Energy Solution Ltd., the world's No. 3 EV battery producer.
A precursor is a material created by mixing nickel, cobalt and manganese, and is added to lithium to make cathodes. Precursors make up 70% of the costs of cathode materials, while nickel accounts for more than half of precursor ingredients.
“It is expected to smoothly meet the mass production target within this year as it secured quality by successfully realizing the nature of precursors based on the combination of LG Chem and Korea Zinc’s technology,” said a Korea Zinc official.
TO CUT RELIANCE ON CHINAThe joint venture is predicted to reduce the heavy reliance of South Korea, home to major battery makers – LG Energy, SK On Co. and Samsung SDI Co. -- on China for precursors, industry sources said.
The global precursor market is currently dominated by Chinese companies as the country has many mines and cheap labor.
EV and cell manufacturers have been
seeking the material produced in other countries as the US deems certain battery materials procured from foreign entities of concern (FEOCs) -- notably businesses significantly influenced by China -- as ineligible for the federal subsidies of up to $7,500 per vehicle.
“The successful prototype production enabled competitive precursor manufacturing to increase customers and sales,” said a Korea Precursor. “We aim to start mass production as soon as possible after obtaining relevant certification.”
Write to Sang Hoon Sung at
uphoon@hankyung.com
Jongwoo Cheon edited this article.
