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Roskill: LG Chem locks-in more raw material to meet future Li-ion battery demand

South Korean lithium-ion battery (LIB) cell manufacturer LG Chem recently announced it will increase cell manufacturing capacity to 90 GWh in 2020 from a previous forecast of 70 GWh. Assuming 100% of output was to be NMC532, 90 GWh would require around 100kt of cathode, containing 40kt nickel, 22kt cobalt, 16kt manganese and 50kt lithium (carbonate equivalent), and 90kt of anode materials which could be 100% graphite, concludes metals and minerals market research company Roskill.

If producing at capacity, LG Chem’s LIB output and raw material consumption would be greater than the entire LIB market in 2015.

In April, LG Chem signed a joint venture with Zhejiang Huayou Cobalt to establish precursor and cathode material facilities with capacity of 40,000tpy, with expansion to 100,000tpy envisioned. Huayou is a cobalt refiner with cobalt mining and processing assets in the DRC.

In July, LG Chem signed a 5-year, 7,000tpy lithium hydroxide off-take with Nemaska Lithium, and last week announced a 3-year, 16,000tpy lithium hydroxide supply agreement with Ganfeng Lithium starting 2019.

LG Chem has also invested in Korean anode producer GS E&C and has a 10% stake in LS Nikko’s nickel sulphate plant. With LG Investment, LG Chem is an investor in Cobalt Blue’s Thackaringa primary cobalt project in Australia, and the company had previously been linked with Pilbara Minerals for a downstream conversion facility.

Roskill’s view is that while other cell manufacturers and automotive OEMs have been getting plans started to meet future electric vehicle demand, LG Chem is one of the only LIB producers to have revealed publicly information on its LIB supply chain raw material supply/strategy.

With lithium spot and cobalt benchmark prices falling, if there was any doubt about the growth of the LIB industry in the short-term and its impact on battery raw materials, the volume of raw materials being locked-in by LG Chem proves that activity in the sector continues at a rapid pace, Roskill said.

Roskill’s Lithium: Global Industry, Markets & Outlook report was published in June 2018.

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