LG Chem Ltd. has secured a 3.8 trillion won ($2.6 billion) contract to supply cathodes, a key material in lithium-ion batteries, to a US customer, South Korea’s largest chemical maker said Thursday, offering a significant lift to a business that has faced weak EV demand and a downturn in petrochemicals.
Analysts estimate the order represents roughly 100,000 tons of cathodes, enough to power about 760,000 electric vehicles.
Citing confidentiality, LG Chem didn’t disclose the buyer in the US, but industry observers point to Tesla Inc., which has been expanding in-house battery capabilities, or Japanese battery giant Panasonic as the most likely candidates.
Under the deal, LG Chem will ship cathodes produced in Korea from Nov. 15 through July 31, 2029.
The materials are expected to be used in US-based battery manufacturing, a process that has taken on new urgency as electric-vehicle makers race to meet sourcing rules under the US Inflation Reduction Act.
A TURNING POINT FOR KOREAN BATTERY-MATERIAL EXPORTS
The US supply chain incentives have made North American battery production increasingly central to global EV strategies, and analysts say Korean battery-material suppliers are beginning to see tangible benefits.
LG Chem’s Korea-made cathodes will qualify US partners for IRA-linked tax credits, positioning the company as a key beneficiary of the policy shift.
LG Chem has an annual cathode capacity of about 150,000 tons, including 60,000 tons at its Cheongju plant and 40,000 tons in Gumi, both in Korea, as well as 50,000 tons from its site in Wuxi, China.
The contract marks LG Chem’s biggest win since February last year, when it struck an eight-year, 25 trillion won agreement with General Motors Co. to supply 950,000 tons of cathodes, which is enough to power roughly five million EVs.
The latest deal comes as the company’s performance shows early signs of recovery.
LG Chem’s operating profit in the quarter ended in September jumped 36.4% to 679.7 billion won from the same period of last year, though revenue fell 11.6% to 11.2 trillion won.
Its business prospects for next year are also improving.
Deliveries under LG Chem’s 2.9 trillion won cathode contract with Toyota’s North American unit, signed in 2023, are set to begin in 2026.
“The latest contract underscores LG Chem’s deepening ties with global automakers and battery manufacturers,” a company official said.
LG Chem shares slipped about 1% in Seoul trading Friday morning, paring some of the previous day’s 6.6% rally.
The broader Kospi fell more than 2.5%, mirroring overnight declines on Wall Street.
