News agencies including Reuters reported on June 29 that LG Energy Solution is reassessing its capacity expansion plan in the US. The South Korean battery manufacturer will take one to two months to make its decision on whether to proceed with a plan to invest in a new factory in Arizona, US. In a statement from LG Energy Solution about this delay, the company cited that the current economic and investment conditions of the US are “unprecedented”. Furthermore, the costs associated with the building of a new battery production plant have risen sharply. At the same time, there are concerns that the demand for EV power batteries will weaken in the future. Hence, the company has delayed the investment project in Arizona.
Earlier this March, LG Energy Solution announced that it will invest around USD 1.3 billion (KRW 1.7 trillion) to set up a battery production plant in Queen Creek, Arizona. This plant would be the first battery plant operated by a South Korean battery manufacturer in the US for the production of cylindrical EV power batteries. The construction phase was originally scheduled to begin in the second quarter of this year, and the plant was expected to enter operation in 2024. With a planned production capacity of around 11GWh, the plant would supply batteries to EV startups.
South Korean conglomerate LG established LG Energy Solution in 2020 to develop battery business. Due to the vast amounts of resources that the parent company has provided, LG Energy Solution has risen rapidly to become the world’s second largest supplier for EV power batteries. Its clients include Tesla, GM, VW, and other major automotive brands. Also, LG Energy Solution launched its IPO on the KRX on January 27 this year. According to the reporting by various news outlets, this IPO is the largest in scale in the South Korean market so far. The initial issue price came to KRW 300,000.
Currently, LG Energy Solution commands more than 20% global market share for EV power batteries. The company has set up production sites in South Korea, the US, China, Poland, Canada, and Indonesia. Going forward, the company will be concentrating its efforts on expanding its presence in North America. Besides the proposed plant in Arizona, LG Energy Solution is also building three new plants that are respectively located in Ohio, Tennessee, and Michigan. These plants, which are now in various stages of development, are joint projects with GM. When announcing that it will be reviewing the proposed plant in Arizona, LG Energy Solution also told the news media that the joint projects with GM will continue. Furthermore, the company will be expanding an existing plant in Michigan.
Another major regional market where LG Energy Solution is putting efforts to increase its presence is Indonesia. On June 8 of this year, the company broke ground on a new nickel processing plant in the country. Aiming to establish a local and vertically integrated supply chain in Indonesia, LG Energy Solution will be investing around USD 9.8 billion in various projects such as this nickel processing plant. At the groundbreaking ceremony, LG Energy Solution said the next local projects will include a refinery capable of outputting 150,000 tons of nickel sulfate per year, a cathode production plant capable of outputting 220,000 tons of precursors and 42,000 tons of cathode materials per year, and a battery cell production plant with a production capacity of 200GWh. The investments in the refinery, cathode plant, and battery cell plant will come to around USD 3.5 billion, USD 2.4 billion, and USD 3.6 billion respectively. The cathode plant that will be placed in KIT Batang will support the battery cell plant that will be placed in West Java.
Moreover, LG Energy Solution is set to sign an agreement with ANTAM to jointly develop a nickel mine on Halmahera Island, which belongs to the eastern part of Indonesia. ANTAM is a mining company controlled by the Indonesian government. This deal, which will be formally sealed this September, will see LG Energy Solution and ANTAM invest around USD 300 million to obtain 16 million tons of nickel ore.
This article is a translation of a Chinese article written by Marry at TrendForce. It contains information that is either sourced from other news outlets or accessible in the public domain.
