LG Chem CEO Shin Hak-cheol (LG Chem)
South Korean battery material firm LG Chem announced Wednesday plans to supply at least 950,000 tons of cathode active materials used for electric vehicles to General Motors over the next eight years, which would be enough for some 5 million units.
Under the long-term supply agreement, LG Chem will supply cathode materials of nickel, cobalt, manganese and aluminum -- which represent about 40 percent of the cost of a battery cell -- starting the second half of 2022 through 2030.
According to LG Chem, its NCMA cathode material boasts a stronger output as it features a high nickel composition and uses less cobalt -- a material subject to price volatility that could affect the price of a battery cell -- while aluminum was applied to the material technology for stability in performance.
The cathode active materials will go to three battery cell plants of Ultium Cells, a joint venture between GM and LG Energy Solution, across the United States. LG Energy Solution is a battery cell affiliate of LG Chem.
LG Chem also said the company looks to build a North American cathode material production facility with GM by the end of 2025, without disclosing details.
The news comes a week after US Treasury Secretary Janet Yellen visited LG Science Park, where LG Chem‘s research base is located, in western Seoul on July 19.
LG Chem is looking to increase its production capacity of NCMA cathode active materials to 260,000 tons by 2026, from 80,000 tons as of this year. To do so, LG Chem in January announced a plan to build a cathode material plant in Gumi, South Gyeongsang Province, with a production capacity of 60,000 tons by 2025.
LG Chem‘s advanced materials division, including materials for battery cathodes and electronics components, saw its operating profit during the second quarter more than triple to 335.4 billion won ($255.4 million) compared to the previous year, while its revenue jumped nearly 60 percent on-year to 2 trillion won, its earnings call showed Wednesday.
The company, dedicated to petrochemicals, advanced materials and biotechnology, recorded an all-time high 12.2 trillion-won quarterly revenue and 878.5 billion-won profit overall.
LG Chem Chief Financial Officer Cha Dong-seok said in an earnings call that the advanced materials division’s high profitability cushioned the impact on the company from external uncertainties.