LG Energy Solution acquires 4.8% stake in Chinese nickel and cobalt producer

LG Energy Solution Ltd. signed a deal with Greatpower Nickel & Cobalt Materials Co. to take over a 4.8 percent stake in the raw material producer in China at 35 billion won ($29.7 million) to better ensure stable supply of battery materials

The Shanghai-based company founded in 2006 is building a factory in China to mass produce nickel sulphate, an ingredient for batteries used in electric vehicles, in 2023.

The Korean leading lithium-ion battery producer will be able to receive 20,000 tons of nickel from the Chinese partner starting 2023 for six years, which is enough to power 370,000 units of high-performing EVs that can run at least 500 kilometers (311 miles) on a single charge.

The deal is a preemptive move to meet the growing demand for EV batteries in the global market by ensuring stable supply of battery materials.

Nickel is a core material for cathodes responsible for enhancing battery capacity and output. Cathodes take up about 40 percent of producing cost of a battery cell. Recently, the demand for high-nickel batteries is increasing because higher nickel content in a battery leads to longer driving range.

LG Energy Solution will start production of high-nickel NCMA (nickel, cobalt, manganese and aluminum) batteries to be equipped with the third-generation EVs in the first half in 2022. The company will increase nickel content for the batteries to up to 90 percent to improve performance, and reduce cobalt content to less than 5 percent and add more aluminum to cut costs.

Market researcher CRU estimates that global demand for nickel will continue to grow from 2.39 million tons in 2020 to 3.32 million tons in 2024.

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