South Korean battery company, LG Chem Ltd, has partnered with China’s Huayou Group, to build a joint electric vehicle (EV) battery material plant in Morocco to expand its range.
The Morocco plant, is slated to begin production in 2026, and will have an annual production target of 50,000 tonnes of lithium-phosphate-iron (LFP) cathode materials. LG Chem revealed in a statement that that production rate will be enough for installation in 500,000 entry-class EVs.
LG Chem has made a name for itself by manufacturing expensive nickel-cobalt-manganese (NCM) cathodes, however, the company has opted to enter the LFP cathode market to cater for demands of cheaper LFP batteries. Cheaper batteries mean more affordable electric cars.
The LFP cathodes produced at the Morocco plant will be supplied to the North American market. With Morocco being a free-trade partner with the US, the products may benefit from tax credits from the USA’s Inflation Reduction Act (IRA), introduced in April to prevent the US from being dependent on China for EV batteries.
While Morocco and South Korea are both free trade partners of the US, LG Chem and Huayou group would need to make changed to their respective equity share to comply with the US Treasury Department’s guideline regarding foreign entities of concern. While the US Treasury Department has yet to clearly explain who these foreign entities are, LG Chem feels the provision is aimed at China.
Huayou Group, is among a growing number of Chinese electric vehicle and battery companies seeking to expand overseas to get easier reach to foreign clients, and receive benefits from local incentives.
In a separate statement, Huayou’s listed unit, Zhejiang Huayou Cobalt Co revealed its intentions of building plants with LG Chem in Indonesia and Morocco under a strategic partnership to promote international growth. Both companies also intend to build a lithium conversion plant in Morocco. The lithium plant is scheduled to begin mass production in 2025, with an annual lithium target of 52,000 tonnes.
In addition, LG Chem has said it has plans on building two more plants in Indonesia.
