Battery cell manufacturer LG Chem has signed loan agreements with three South Korean banks for a total of 700 billion won – equivalent to around 550 million euros – to finance the expansion of its production capacities in Poland.
According to Korean media, the loan is a so-called green loan to finance environmentally friendly projects. It follows a five-year loan of the equivalent of 4.6 billion euros granted by Korean banks at the end of 2019 under the ‘Industrial and Financial Cooperation Programme’.
In March, LG Chem had also secured a 480 million euro loan from the European Investment Bank to expand its production capacities in Wroclaw in southwest Poland. The EIB-backed project, whose total cost amounts to about 1.5 billion euros, involves increasing LG Chem’s annual production capacity in Wroclaw by more than 35 GWh to around 65 GWh. By the end of 2022, some 6,000 full-time employees are to work at the plant.
Currently, the output of LG Chems battery cell production in Europe amounts to 15 GWh. If the EIB-funded project is to provide a capacity increase of 35 GWh, this means that LG Chem will finance the missing 15 GWh from other sources. The borrowing that has now been announced should serve precisely this purpose.
LG Chem had recently purchased a former TV assembly plant of the Turkish company Vestel close to the existing production facility to expand the plant in Wroclaw. Problems during the production ramp-up at this plant have not only caused bottlenecks at Audi’s e-tron plant in Brussels, but also in Jaguar I-Pace production at Magna in Graz. With the announced quadrupling, production would suffice for around 800,000 to one million electric cars, depending on the size of the batteries installed.
LG Chem currently supplies 13 of the 20 major car brands, including Volkswagen, Renault, General Motors and Hyundai. The Group has presently five battery plants in South Korea, China, the United States and Poland with a total capacity of 70 GWh. In total, the South Koreans plan to invest around 3 trillion won (about 2.25 billion euros) in battery plants this year, increasing capacity to 100 GWh before the end of the year.