South Korea’s LG Chem to Build $3 Billion Cathode Plant in the U.S.
- November 22, 2022
- Posted by: Quatro Strategies
- Category: Manufacturing
South Korean chemicals company LG Chem announced its plans to invest $3 billion to build a cathode plant in the U.S. state of Tennessee, as the company looks to utilize U.S. Inflation Reduction Act’s (IRA) tax credit scheme and meet rising demand for electric vehicle (EV) components in North America. The announcement marks one of the first major EV-related investment by a South Korean firm in the United States since the IRA was signed by Biden into law in August.
The new plant will start mass production in the second half of 2025, LG Chem said in a statement. The factory’s production capacity will be 120,000 tons of cathode materials by 2027, enough to power around 1.2 million EVs.
LG Chem added that it is also pursuing cooperation with mining firms and recycling companies to better support its customers so that requirements of the new law, the Inflation Reduction Act, can be met.
The company is expected to supply cathode materials from the new plant to Ultium Cells, a battery joint venture between General Motors and LG Chem’s subsidiary LG Energy Solution (LGES).
LG Chem’s new plant will make 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 their exposure to refining and processing in China.
China currently has 75% of the world’s cobalt refining capacity and 50% of the lithium processing capacity.
The Inflation Reduction Act will, among other measures, require from next year that at least 40% of the monetary value of critical minerals for batteries be from the United States or an American free-trade partner in order to qualify for U.S. tax credits. That share will rise to 80% in 2027.
South Korean automakers Hyundai and Kia have been especially hit hard by the new measures, which immediately ended credit for about 70% of the 72 models that were previously eligible for tax credits.
At this month’s G20 summit, South Korean President Yoon asked Biden to prevent discriminatory measures against South Korean companies.
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