LG chemistry lithium nickel cobalt "Yangmou"

In line with the rapid expansion of the global battery business, LG Chemistry has accelerated the layout of upstream lithium nickel and cobalt raw materials.

On May 8, the news showed that LG Chemical, Zhejiang Huayu Cobalt Company and Wuxi High-tech Zone signed a cooperation agreement, and the automotive power battery positive electrode material project was officially settled. The project was invested and built by a joint venture company established by LG Chemical and Huayu Cobalt. The total investment is US$ 1 billion, and production capacity planning is 100,000 tons. Construction is planned to start in September, completion and production will be completed in September next year, and mass production will be completed in May 2020.

Last month, huayu cobalt announced that huayu new energy, a wholly-owned subsidiary of the company, and LG chemistry jointly invested $159 million and $476 million to set up two joint ventures(with an investment of more than Rmb4bn). The two companies are tentatively named Huajin New Energy Materials(Quzhou) Co., Ltd. and Leyou New Energy Materials(Wuxi) Co., Ltd..

The two joint ventures belong to the front and rear links in the manufacturing chain. Huayu Cobalt and LG Chemical respectively control one of them to achieve equity checks and balances. Huajin New Energy produces lithium electric three-yuan precursor, and Huayu Cobalt holds 51 % of the shares to achieve control; LG Chemical holds another 49 %. Leyou New Energy produces three positive materials, LG Chemical holds 51 %, and realizes holding; Huayu Cobalt holds 49 % of the shares. After this cooperation, Huayu Cobalt can supply major raw materials such as cobalt and nickel to the Sanyuan Precursor Company, while the Sanyuan Precursor Material Company can supply it to the Positive Material Company.

From this point of view, the signing of the above cooperation agreement marks a substantial progress in the cooperation between LG Chemical and Huayu Cobalt.

Industry analysis believes that with the rise of the global electric wave, the rapid expansion of power batteries, upstream raw materials gradually show an imbalance between supply and demand, the price is difficult to control. LG Chemical, as a global power battery giant, will have a direct bearing on its global strategy to ensure adequate and low-cost supply of raw materials. The purpose of LG Chemical's cooperation with Huayu Cobalt, which is currently China's largest supplier of cobalt products and one of the richest companies in the domestic cobalt industry, is obvious.

As of last year, LG Chemical had reached supply agreements with about 30 carmakers around the world, worth 42 trillion won, according to data from the survey. In the United States, Europe and China, the number of its customers has been growing. In February, LG Chemical also announced its joint venture with India, Mahindra & Co.. Mahindra's partnership, the owner of South Korean carmaker Ssangyong, is developing rechargeable batteries.

In the energy storage market, LG chemical energy storage systems shipped 3.7 GWh globally as at the end of December 2017. LG Chemical expects that the company's cumulative global shipment volume in 2018 is expected to exceed 6GWh.

LG says revenue is set to grow by 40 % in the next two years, thanks to rising battery demand, particularly for electric vehicles and energy storage systems.

Supporting LG Chemicals to achieve a significant growth in the battery business is to hold certain power battery orders and focus on the layout in the energy storage field on the one hand, and to strengthen the cultivation of internationalized material supply chains to continuously reduce costs while strengthening the core components. Self-control ability. Improve product profit space by differentiating competition.

In fact, in addition to the layout of cobalt materials in cooperation with Huayu Cobalt, LG Chemistry, which focuses on ternary batteries, has also carried out in-depth layout in two other extremely important raw materials, lithium and nickel. Its layout is almost the same. All of them choose to invest in the raw materials field for many years and have mineral resources leading companies to carry out equity cooperation and deep binding to ensure the supply of raw materials.

On the lithium side, Bloomberg recently quoted people familiar with the matter as saying that Gan Feng lithium industry and LG Chemical are approaching MineralResources Ltd. in an attempt to acquire a part of the latter's stake in a lithium mine in Australia.

Perth-based MinalResources said Tuesday it would begin selling up to 49 per cent of the project after receiving offers from other companies to invest and buy the product. According to the company, the Wodgina mine is located 100 kilometers south of the Port of Hedland in the Zhoupierbula region of Western Australia. It is the world's largest hard rock lithium deposit and is expected to be valued at up to A$ 4 billion($3 billion).

It is worth mentioning that as early as November 2017, Australia's lithium mining company Pilbara Minerals announced that it will join forces with South Korean companies to build a lithium processing plant in South Korea. One of the South Korean companies that has signed a memorandum of understanding with Pilbara Minerals is LG Chemical. According to the agreement, the proposed processing plant will invest 309 million U.S. dollars and have an annual production capacity of 30,000 tons of lithium hydroxide. It is scheduled to be put into production in January 2020 and will supply products for the Korean battery industry.

On the nickel side, LG Chemical announced on November 8, 2017 that the company invested 1 billion won(approximately US$ 897,000) in Kemco and obtained a 10 % stake in the latter. Kemco is a Korean nickel sulfate supplier. LG Chemistry aims to use this investment to obtain a stable supply, because nickel sulfate is the core material of lithium ion batteries.

According to an insider of LG Chemical, after the conclusion of the equity investment, LG Chemical can optimize the supply of nickel sulfate since 2018 compared to other competitors, which will help LG Chemical cope with the lack of supply of lithium battery materials in the future.

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