Japan's Toyota Group has made an equity investment in LG Chem's cathode material business.

LG Chem announced on the 9th that Toyota Tsusho, a member of the Toyota Group, has acquired a 25% stake in the Gumi Cathode Material Plant (LG-HY BCM), becoming the second-largest shareholder. This stake is valued at approximately KRW 160 billion to KRW 170 billion. Toyota Tsusho is a key company within the Toyota Group, responsible for procuring a significant portion of raw materials for finished vehicles.

With this investment, Toyota Tsusho has secured 25% of the 49% stake previously held by Huayou Cobalt. The new share structure of LG Chem's Gumi Cathode Material Plant is LG Chem 51%, Toyota Tsusho 25%, and Huayou Cobalt 24%. Consequently, the cathode materials produced at this plant now meet the newly defined 'PFE (Prohibited Foreign Entity)' criteria related to the U.S. Inflation Reduction Act (IRA) as of July. PFE refers to the criteria set by the U.S. government for restricted foreign entities, such as those from China. Under this criteria, if a company sanctioned by the U.S. holds a stake of 25% or more, products from that company or plant are excluded from tax credits.

Previously, the Gumi Cathode Material Plant was classified as a PFE-regulated entity due to Huayou Cobalt's 49% stake. However, the change in shareholding structure now aligns with PFE standards, enabling compliance with IRA regulations. Toyota Tsusho plans to supply the cathode materials produced at the Gumi plant to battery customers in North America.

LG Chem aims to accelerate its strategy to penetrate the cathode material market, leveraging its world-class products and strong global partnerships. The Gumi Cathode Material Plant is a key hub with an annual production capacity of 66,000 tons. Recently, it adopted the Precursor-Free Cathode (LGPF, LG Precursor Free) process, which involves direct calcination from custom-designed metals without using precursors, earning it recognition for its world-class product competitiveness.

Based on a stable supply chain, LG Chem continues to expand its customer base. In 2023, it signed a KRW 2.9 trillion cathode material supply contract with Toyota North America Manufacturing (TEMA), and in February last year, it entered into a KRW 25 trillion supply agreement with General Motors (GM) for cathode materials equivalent to approximately 5 million electric vehicles. In September last year, it secured a cathode material supply project from 'PPES (Prime Planet Energy & Solutions)', a joint venture between Toyota Motor and Panasonic in Japan.

Shin Hak-cheol, Vice Chairman of LG Chem, stated, "Toyota Tsusho's equity participation is a significant turning point for LG Chem as it responds to the U.S. IRA regulations while further strengthening the competitiveness of its cathode material plants in the global market," adding, "We will continue to reinforce our position as a global market leader in the battery materials market, based on world-class products and strong partnerships."

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