LG Chem and Huayou Group to Launch Electric Car Battery Plant in Morocco

Rabat – Korea’s LG Chem, the country’s largest chemical company, announced on Sunday it has entered into a partnership with China’s Huayou Group’s subsidiary Youshan to build a joint electric vehicle (EV) battery material plant in Morocco, Reuters reports.

The plant, set to start production in 2026, aims to produce 50,000 metric tonnes of lithium-phosphate-iron (LFP) cathode materials annually, enough to be installed in 500,000 entry-class EVs, the Korean chemical maker said in a statement.

LG Chem, known for manufacturing more expensive nickel-cobalt-manganese (NCM) cathodes, is entering the LFP cathode business for the first time to meet the growing demand for cheaper LFP batteries as the auto industry steps up its efforts to produce more affordable EVs.

Batteries are by far the most expensive part of EVs, accounting for an average of 40% of the total cost.

LG Chem said LFP cathodes produced at the Morocco plant will be supplied to the North American market and receive subsidies from the U.S. Inflation Reduction Act (IRA) as Morocco is a free-trade partner with the United States.

The IRA is designed to wean the United States off the Chinese supply chain for EVs. It requires at least 40% of the value of critical minerals used in an auto battery to be sourced from the United States or a free trade partner to qualify for a $3,750 tax credit per vehicle. Korea has a free-trade agreement with the United States, the Reuters report explains.

LG Chem also announced an additional investment plan with Huayou Cobalt to build a lithium conversion plant in Morocco, aiming to start mass production by 2025 with an annual capacity of 52,000 tonnes of lithium.

Furthermore, LG Chem said it plans to build two other facilities in Indonesia – a precursor plant with an annual production capacity of 50,000 tonnes, and a plant to extract mixed hydroxide from nickel ore for precursor production.

The size of LG Chem’s investments for its four facilities with Huayou Group has not been finalized yet.

“We will actively respond to the emerging LFP cathode materials market with the Morocco plant as our global base,” said LG Chem CEO Shin Hak-cheol. “Our goal is to create a strong, vertically integrated materials supply chain flowing from raw materials to precursors and cathode materials and solidify our status as the world’s top comprehensive battery materials producer.”