SEOUL, Nov. 23 (Korea Bizwire) — LG Chem Ltd., South Korea’s top chemical producer, said Wednesday it forged a partnership with a major South Korean smelter of nonferrous metals to work together for a stable supply of electric vehicle (EV) battery components in North America.
LG Chem said it signed a memorandum of understanding with Korea Zinc Inc. on a comprehensive business partnership, including the joint exploration of metals that can be used in the manufacturing of cathode materials, a key component for lithium-ion batteries.
The partnership will come with a stock swap between the two companies, worth a total of 257.6 billion won (US$190.5 million), LG Chem said.
LG Chem will acquire a 0.47 percent stake in Korea Zinc, and Korea Zinc will buy a 1.97 percent stake in LG Chem.
Wednesday’s announcement came a day after LG Chem unveiled a US$3 billion plan to build its first cathode plant in the U.S. state of Tennessee.
LG Chem said the decision was made as part of efforts to comply with the mineral requirements in the new U.S. law on EV tax credits.
The Inflation Reduction Act, signed into law in August, requires EV batteries over the years to be made with higher portions of minerals processed or mined in the U.S., or elsewhere that have free trade pacts with the country.
The IRA has prodded South Korean automakers and producers of EV batteries and battery components to quicken their steps for facility expansion in North America, or bolstering partnerships with U.S. and its partner countries, like Canada and Australia.
LG Chem’s Tennessee plant, once completed, will gradually increase the annual production by 2027 to 120,000 tons of cathodes, which include, nickel, cobalt, manganese and aluminum, enough to power 1.2 million pure EVs.
LG Chem said the partnership will create a huge synergy in securing a stable supply chain of battery materials, given Korea Zinc’s industry-leading smelting technology that enables the recovery of metals and manufacturing of high-purity metals.
Korea Zinc took over a U.S. electronics waste recycling firm in July.