South Korean chemical company LG Chem and China's Huayou Group have unveiled their plans for a comprehensive collaboration in the field of LFP (Lithium Iron Phosphate) cathode materials. Although the partnership remains in the memorandum of understanding phase, the ambitious vision outlines the establishment of four joint manufacturing plants, two in Morocco and two in Indonesia.
The centerpiece of this collaboration is a Moroccan-based factory dedicated to the production of LFP cathode materials, boasting an annual capacity of 50,000 tonnes, slated to commence operations in 2026. Notably, these materials are earmarked for supply to North America and are expected to benefit from subsidies granted by the U.S. government through the Inflation Reduction Act (IRA). The strategic choice of Morocco is underpinned by its free trade agreement with the United States. While specifics of the joint venture's ownership structure are yet to be disclosed, industry watchers anticipate that LG Chem is likely to retain a majority stake, given the regulatory landscape and the Foreign Entity of Concern (FEOC) regulations outlined in the IRA. This strategic alignment is tailored to ensure a favorable reception in the United States.
Beyond the LFP cathode materials, LG Chem and Huayou plan to establish a lithium conversion facility in Morocco, set to yield 52,000 tonnes of battery-grade lithium each year, starting in 2025. This lithium will be channeled directly into the LFP plant, showcasing the partners' commitment to bolstering LG's cathode supply chain through vertical integration.
These Moroccan LFP projects mark LG Chem's initial foray into lithium iron phosphate endeavors, reflecting the surging demand for LFP cathode materials in the EV sector. LFP cathodes are increasingly valued for their cost-effectiveness when compared to nickel-cobalt-manganese (NCM) cathodes. Furthermore, LG Chem envisions a future expansion into LMFP (Lithium Manganese Iron Phosphate) cathode materials, designed to enhance energy density and performance compared to conventional LFP materials.
Expanding their footprint, LG Chem and Huayou Cobalt are extending their collaboration to Indonesia. This facet of their partnership encompasses a high-pressure acid leaching (HPAL) plant and a precursor plant dedicated to cathode materials, both with a substantial annual production capacity of 50,000 tonnes.