GEM’s co-founder Wang Min (from left), EcoPro’s founder and former chairman Lee Dong-che and GEM’s chairman Xu Kaihua take a picture after agreeing to cooperate at EcoPro’s headquarters in South Korea (Courtesy of EcoPro)
South Korea’s leading electric vehicle cell materials producer EcoPro Group joined hands with the world’s second-largest precursor manufacturer GEM Co. to establish an integrated cathode material production complex in Indonesia.
The move aims to improve cost competitiveness amid the sustained slowdown in the global EV industry by manufacturing cathodes and precursors — core materials for batteries – in the Southeast Asian country, the world’s largest nickel producer.
EcoPro, the world’s top nickel-rich cathodes manufacturer, said on Monday it has agreed with China’s GEM to cooperate on the overall cathode materials ecosystem, which includes raw battery mineral mines, smelting, precursors and cathodes. EcoPro BM Co., the group’s cathodes-producing unit, is set to build a consolidated production base in Indonesia through the partnership.
“It is impossible to get over the current chasm without devastating innovation,” said Lee Dong-che, the founder and former chairman of EcoPro, referring to a slower-than-expected global EV uptake. “We agreed to pursue a project in Indonesia for an integrated system, which covers smelting, precursors and cathode materials, based on the strong trust established with GEM over the past decade.”
EcoPro’s business is heavily affected by the prices and procurements of nickel, which makes up about 40% of costs for manufacturing cathodes. GEM has a nickel smelter with an annual capacity of 150,000 tons in North Morowali Regency of Central Sulawesi province Indonesia.
The two companies are likely to form a joint venture in the country and establish a manufacturing facility around the smelter, industry sources in Seoul said.
“They will be able to secure cost competitiveness to take on other Chinese rivals if they procure nickel from nearby mines and produce cathodes at a single plant,” said one of the sources.
COMPETITIVENESS FOR ECOPRO’S PRECURSOR
EcoPro Materials Co., the group’s precursor manufacturer, is set to acquire a stake in PT Green Eco Nickel, a smelter owned by GEM in Sulawesi, an Indonesian island east of Borneo, according to the South Korean conglomerate.
The takeover is expected to allow EcoPro Materials to expand its business to the smelting and secure minerals eligible for US federal tax incentives on EVs, the group said.
“EcoPro Materials are expected to improve competitiveness by covering all the smelting and precursor business,” Lee said.
In March, EcoPro Co., the group’s holding company has already bought a 9% stake in the smelter for $11 million.
Meanwhile, EcoPro Co.’s board of directors has recently agreed to appoint Lee as a standing advisor for the group to get over the recent slowdown in the battery sector and secure future growth drives.
Lee was released from jail last month on a special presidential pardon granted on the occasion of the Aug. 15 Liberation Day of Korea.
He was set free about a year and three months after he was sentenced to two years in prison last year on charges of insider trading in 2020 and 2021, which allowed him to make 1.1 billion won ($816,000) in illicit profits.
By Woo-Sub Kim
duter@hankyung.com
Jongwoo Cheon edited this article.
