LPI (ASX) Lithium report and LPI overweight

Originally posted by justdoit7 ↑

Lithium: LG Chem locks-in more raw material to meet future battery demand

Lithium: LG Chem locks-in more raw material to meet future battery demand
Posted on 17th August 2018 in General News.

South Korean lithium-ion battery (LIB) cell manufacturer LG Chem recently announced it is to increase cell manufacturing capacity to 90GWh in 2020 from a previous forecast of 70GWh. LG Chem produces a variety of cell forms of different chemistries, supplying small cells for portable electronics through to large format automotive batteries. Assuming 100% of output was to be NMC532, 90GWh 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. If producing at capacity, LG Chem’s LIB output and raw material consumption would be greater than the entire LIB market in 2015.

It is no surprise then that LG Chem has been getting its raw material supply chain in order to meet future LIB capability. 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 view: While other cell manufacturers, and automotive OEMs, have been busy getting plans started to meet future electric vehicle demand, LG Chem is one of the only LIB producers to have publically revealed information on its LIB supply chain raw material supply/strategy. Other such deals are known, and more will certainly be announced or come to public attention. Moreover, 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.

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