Toyota Tsusho acquires decisive stake in LG Chem cathode plant in South Korea
Toyota Tsusho is the general trading company of the Japanese automotive giant, Toyota Group, playing a crucial role in the procurement of raw materials for Toyota Motor. As Toyota Tsusho is purchasing Huayou Cobalt’s 25 per cent stake in the South Korean cathode material plant, the Chinese company’s shareholding will be reduced from 49 per cent to 24 per cent. This will enable the plant’s products to comply with newly redefined US stipulations regarding foreign entities (PFE), demanding that entities with more than 25% ownership by restricted parties (here, China) may be excluded from relevant tax credits in the USA.
The other major stakeholder in the plant, South Korean battery giant LG Chem, has announced that it is joining forces with the Toyota Group to intensify its market strategy for cathode materials. In September 2024, LG Chem signed a supply agreement for cathode active materials (CAM) for electric vehicle batteries with Prime Planet Energy & Solutions (PPES), the battery joint venture between Toyota and Panasonic.
To ensure that battery materials brought into the USA stay in battery loops (and avoid PFE limitations, LG Energy Solution (LGES) and Toyota Tsusho have established a joint venture called Green Metals Battery Innovations for battery recycling in the USA. A pre-processing plant in North Carolina is to be built and is scheduled to go into operation in 2026.
The construction of the South Korean plant was announced in early 2022. The three plants owned by LG Chem in South Korea have a total production capacity of 80,000 tonnes of cathode material per year. With a capacity for producing over 60,000 tonnes, Gumi is by far LG Chem’s largest plant producing cathode materials.
LG Chem CEO Shin Hak-cheol said, “Toyota Tsusho’s equity participation marks a pivotal turning point as LG Chem strengthens its cathode supply competitiveness under the U.S. IRA framework. We will further solidify our leadership in the battery materials market on the strength of world-class products and powerful global partnerships.”
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