LG Chem Ltd. has secured a 3.8 trillion gained ($2.6 billion) contract to produce cathodes, a key materials in lithium-ion batteries, to a US buyer, South Korea’s largest chemical maker stated Thursday, providing a major carry to a enterprise that has confronted weak EV demand and a downturn in petrochemicals.
Analysts estimate the order represents roughly 100,000 tons of cathodes, sufficient to energy about 760,000 electrical autos.
Citing confidentiality, LG Chem didn’t disclose the customer within the US, however trade observers level to Tesla Inc., which has been increasing in-house battery capabilities, or Japanese battery large Panasonic because the almost certainly candidates.
Beneath the deal, LG Chem will ship cathodes produced in Korea from Nov. 15 by means of July 31, 2029.
The supplies are anticipated for use in US-based battery manufacturing, a course of that has taken on new urgency as electric-vehicle makers race to fulfill sourcing guidelines underneath the US Inflation Discount Act.
A TURNING POINT FOR KOREAN BATTERY-MATERIAL EXPORTS
The US provide chain incentives have made North American battery manufacturing more and more central to international EV methods, and analysts say Korean battery-material suppliers are starting to see tangible advantages.
LG Chem’s Korea-made cathodes will qualify US companions for IRA-linked tax credit, positioning the corporate as a key beneficiary of the coverage shift.
LG Chem has an annual cathode capability of about 150,000 tons, together with 60,000 tons at its Cheongju plant and 40,000 tons in Gumi, each in Korea, in addition to 50,000 tons from its website in Wuxi, China.
The contract marks LG Chem’s greatest win since February final 12 months, when it struck an eight-year, 25 trillion gained settlement with Common Motors Co. to produce 950,000 tons of cathodes, which is sufficient to energy roughly 5 million EVs.
The most recent deal comes as the corporate’s efficiency exhibits early indicators of restoration.
LG Chem’s working revenue within the quarter resulted in September jumped 36.4% to 679.7 billion gained from the identical interval of final 12 months, although income fell 11.6% to 11.2 trillion gained.
Its enterprise prospects for subsequent 12 months are additionally bettering.
Deliveries underneath LG Chem’s 2.9 trillion gained cathode contract with Toyota’s North American unit, signed in 2023, are set to start in 2026.
“The most recent contract underscores LG Chem’s deepening ties with international automakers and battery producers,” an organization official stated.
LG Chem shares slipped about 1% in Seoul buying and selling Friday morning, paring a number of the earlier day’s 6.6% rally.
The broader Kospi fell greater than 2.5%, mirroring in a single day declines on Wall Avenue.
