South Korean LG Chem teams up with China’sxHuayou Group to build 2 plants in Morocco

South Korean LG Chem announced Sunday that in partnership with China’s Huayou Group it will establish two factories in Morocco for the production of lithium-phosphate-iron (LFP) cathode materials and lithium conversion, essential components in the manufacturing of batteries for electric vehicles.

LG Chem and Huayou Group signed a comprehensive memorandum of understanding (MOU) on September 22, 2023, to jointly enter the LFP cathode material market and strengthen their cathode supply chain. The parties will work together to build two facilities in Morocco, namely an LFP cathode material plant and a lithium conversion plant, the company said in a press release.

“We will actively respond to the emerging LFP cathode material market with the Morocco plant as our global base,” said LG Chem CEO Shin Hak-cheol. “Our goal is to create a strong, vertically integrated material supply chain — flowing from raw materials to precursors and cathode materials — and solidify our status as the world’s top comprehensive battery materials producer.”

LG Chem and Huayou Group’s subsidiary Youshan will build a LFP cathode material plant in Morocco, which sits on the world’s largest reserve of phosphate rocks. The plant is slated for mass production by 2026 with an annual capacity of 50,000 metric tons and is expected to meet the soaring demand for LFP cathode materials, which is gaining popularity due to their price competitiveness over nickel-cobalt-manganese (NCM) cathodes. 50,000 tons of LFP cathode materials are enough to be installed in 500,000 entry-class electric vehicles (that come with a 50-kilowatt-per-hour capacity and a 350-kilometer range), the company explained.

LFP cathode materials produced at the Morocco plant will be supplied to the North American market and subsidized by the U.S. Inflation Reduction Act (IRA) as Morocco is a signatory to the U.S. Free Trade Agreement (FTA). LG Chem and Youshan are to adjust its share in compliance with the regulations of the Foreign Entity of Concern (FEOC) regulations of the IRA.

LG Chem will venture into the LFP cathode materials business based on the Morocco plant and expand the business into lithium-manganese-phosphate-iron (LMFP) cathode materials, a mixture of manganese and LFP that provide more capacity and better output than LFP cathode materials.

LG Chem will also promote the lithium conversion plant business with Huayou Cobalt in Morocco. A conversion plant is a facility that extracts lithium hydroxides and lithium carbonates, both of which are essential for producing cathode materials from lithium concentrates. The lithium conversion plant is expected to mass-produce 52,000 tons of lithium annually by 2025 and supply the LFP plant.

In addition to the two planned factories in Morocco, the two partners announced the construction of two more facilities in Indonesia. The first one will be dedicated to the production of cathode precursor materials with an annual capacity of 50,000 tons, and the second one will be an extraction facility for mixed hydroxide from nickel ore, intended for the production of precursors.