L&F Co., a major South Korean electric vehicle battery material maker, is set to spend up to 800 billion won ($608.8 million) on a factory in the country for precursor, a key cell component of EV batteries, to take advantage of US measures that favor products made in North America or its trading partners.
L&F, a cathode supplier to the global EV leader Tesla Inc., is finalizing the details of the factory including its capacity and investment value, while seeking a partner, according to industry sources on Tuesday.
“We are aware that the company is coordinating with various companies including LS MnM, South Korea’s only copper smelter, to build a joint plant,” said one of the sources. LS MnM Inc., formerly LS-Nikko Copper Inc., is the world’s second-largest electrolytic copper maker. “It is advantageous to cooperate with a mineral company since precursors are closely related to minerals.”
L&F is expected to invest 600 billion won-800 billion won in the factory, which can manufacture 60,000-80,000 tons of precursors a year, the sources said.
Last month, an L&F official reportedly said the company aims to produce more than 60,000 tons of precursor annually in Korea to meet more than 20% of its precursor needs; precursors make up 70% of cathode production costs.
The company has been heavily relying on Chinese precursor manufacturers such as CNGR Advanced Material Co., although it procured some from its subsidiary JH Chemical Co.
L&F needs to cut reliance on Chinese producers as the US government requires that 50% of the value of battery components be produced or assembled in North America to qualify for an EV tax credit. It also requires that 40% of the value of critical minerals be sourced from the US or one of its free trade partners, such as South Korea, for the incentive.
Korea’s top petrochemicals company LG Chem Ltd., the parent company of the world’s second-largest EV battery maker LG Energy Solution Ltd., plans to launch a 1.2 trillion won precursor joint venture with Chinese partner Zhejiang Huayou Cobalt Co. in Korea.
SK On Co., the world’s fifth-largest cell producer, also decided to build a precursor factory in Korea in cooperation with EcoPro Co. and China’s GEM Co.