Toyota Tsusho, the trading arm of Japan’s Toyota Group, will acquire a 25% stake in a South Korean cathode material plant from China’s Huayou Cobalt, reducing Huayou’s ownership in the facility to 24%, the companies said on Tuesday.
The plant, operated jointly by LG Chem and Huayou Cobalt in Gumi, South Korea, produces cathode active materials for electric vehicle batteries. The shift in ownership is intended to ensure the facility’s products comply with U.S. restrictions on “foreign entities of concern” (FEOC), which limit tax credit eligibility for materials sourced from facilities with more than 25% Chinese ownership.
LG Chem, which holds the remaining majority stake, said the deal deepens its strategic partnership with Toyota. In 2024, LG Chem signed a cathode supply agreement with Prime Planet Energy & Solutions (PPES), Toyota’s battery joint venture with Panasonic. LG Chem CEO Shin Hak-cheol said, “Toyota Tsusho’s equity participation marks a pivotal turning point as LG Chem strengthens its cathode supply competitiveness under the U.S. IRA framework. We will further solidify our leadership in the battery materials market on the strength of world-class products and powerful global partnerships.”
Toyota Tsusho and LG Energy Solution (LGES) have also set up a U.S.-based battery recycling joint venture, Green Metals Battery Innovations, with plans to build a pre-processing plant in North Carolina by 2026. The effort is designed to reinforce circular supply chains and meet U.S. sourcing requirements.
The Gumi site is LG Chem’s largest cathode production facility, with an annual capacity of more than 60,000 tonnes. Together with its two other South Korean plants, LG Chem produces around 80,000 tonnes of cathode materials annually.