“LG Chem” will invest more than 3 billion dollars in the construction of a cathode battery plant in the United States

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SEOUL – South Korea’s LG Chem Ltd said Tuesday it will invest more than $3 billion to build a battery cathode plant in Tennessee as it ramps up plans to meet growing U.S. demand for electric vehicle components.

It’s one of the first major EV-related investments announced by a South Korean firm in the U.S. since the new U.S. law passed in August, forcing automakers and battery suppliers to rely heavily on China for cheap supplies.

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Mass production will begin in the second half of 2025 and the plant will create more than 850 jobs, LG Chem said in a statement.

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The plant is expected to have an annual production capacity of 120,000 tons of cathode material by 2027, enough to power approximately 1.2 million electric vehicles.

Its shares rose 1.9% on the news, outpacing a 0.3% decline for the broader market.

LG Chem added that it is also working with mining companies and recycling companies to better support its customers in meeting the requirements of the new law, the Inflation Reduction Act.

LG Chem is expected to supply cathode materials to Ultium Cells, a battery joint venture between General Motors and LG Chem’s subsidiary LG Energy Solution Ltd (LGES).

LGES, which supplies batteries to Tesla Inc, Ford Motor Co and Hyundai Motor Co, among others, last month raised its revenue forecast for 2022 to 25 trillion won ($18.4 billion) from 22 trillion won, citing new projects from the automakers.

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LG Chem’s new plant will produce cathodes for batteries with a nickel, cobalt, manganese and aluminum (NCMA) chemistry. The NCMA battery, which is about 90% nickel, allows manufacturers to reduce their reliance on expensive cobalt and reduce the risk of processing and processing in China.

According to Benchmark Mineral Intelligence, China currently has 75% of the world’s cobalt processing capacity and 50% of lithium processing capacity.

GM said it will use NCMA battery cathodes from LG Chem for a range of electric vehicles using Ultium-brand batteries.

The Inflation Reduction Act, among other measures, would require at least 40% of the cash value of critical minerals for batteries to come from the US or an American free trade partner to qualify for US tax credits starting next year. This share will increase to 80% in 2027.

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Automakers such as Hyundai Motor and Kia Corp were hit hard by the new law, which immediately suspended credits for about 70% of the 72 car models previously eligible for EV subsidies.

At the G20 summit held this month, South Korean President Yoon Suk-yeol asked US President Joe Biden to prevent discriminatory measures against South Korean companies.

He added that Biden responded that the implementation of the law should take into account the contribution of South Korean investment to the US economy. ($1 = 1,358,1800 won) (Reporting by Heekyong Yang; Editing by Muralikumar Anantharaman and Edwina Gibbs)



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