LG Chem will spend 10 trillion won ($8.7 billion) through 2025 to accelerate “sustainable growth” in its battery materials operations and other business lines, joining other South Korean industrial giants in a shift toward greener practices.
The petrochemical producer will make a 6-trillion-won investment in expanding production lines of its battery materials, including cathode and separators, while 3 trillion won will go into producing eco-friendly petrochemical products, according to a statement on Wednesday. The rest of the investment will be used in LG’s life science operations.
“This is by far the most innovative change the company is making since its establishment, which will further lift value and sustainability,” CEO Shin Hak Cheol said in a statement before a briefing in Seoul. “We’ll be able to see tangible results from the second half of this year.”
The private sector in South Korea has been rushing to announce massive investment plans to reduce their carbon footprint and foster sustainable growth. SK Innovation Co. earlier this month said it will invest 30 trillion won through 2025 to strengthen its green business portfolio, mainly in battery and recycling plastic waste, while Lotte Chemical Corp. on Tuesday said it will spend 4.4 trillion won through 2030 to increase hydrogen output.
“We will transform our business portfolio based on ESG-related operations and we will prove that we can make a sustainable growth,” Shin said in his briefing. “It’s the time for a major overhaul.”
LG’s massive investment in its battery materials operations comes amid surging demand for electric vehicles. The company predicts the materials market will grow to about 100 trillion won ($87 billion) in 2026, from 39 trillion won ($34 billion) in 2021.
To benefit from increased demand, LG Chem will start building a cathode materials production facility in Gumi, South Korea, from December with an annual capacity of 60,000 tons, it said. LG expects its cathode output capacity to rise to 260,000 tons in 2026, from 40,000 tons in 2020.
The company is also seeking mergers and acquisitions or joint ventures on separators, with a plan to set up an overseas manufacturing plant, while further expanding carbon nanotube production. For the stable supply of metals used in cathode output, LG is working on forming a joint venture with a mining company to improve its competitiveness in sourcing, Shin said.
By broadening the line of products for battery materials, LG hopes to maximize its partnership with battery unit LG Energy Solution, which has applied to the Korea Exchange for a preliminary review for an initial public offering. The listing is possible this year, Shin said, adding that LG Chem will continue to maintain a 70 percent to 80 percent stake in the unit.