Gumi: LG Chem Ltd., South Korea's leading chemical company, announced that a Toyota Group affiliate has acquired a 25 percent stake in its cathode plant to enhance their global battery materials partnership. Toyota Tsusho Corp., the trading arm of Toyota Group, bought the stake in LG-HY BCM, LG Chem's cathode materials plant in Gumi, located 230 kilometers south of Seoul, to boost their competitiveness in the cathode materials market, as stated in a press release from LG Chem.

According to Yonhap News Agency, under the partnership, Toyota Tsusho, now the second-largest shareholder, plans to supply a portion of the cathode active materials produced at the Gumi plant primarily to battery manufacturing customers in North America. LG Chem aims to expedite its cathode materials strategy by leveraging its globally competitive products and strong industry partnerships.

LG Chem Chief Executive Officer Shin Hak-cheol remarked that Toyota Tsusho's equity participation marks a pivotal turning point as LG Chem strengthens its cathode supply competitiveness under the U.S. Inflation Reduction Act (IRA) framework. The U.S. IRA necessitates that 50 percent of the value of battery components be assembled in North America to qualify for a $3,750 tax credit, with 40 percent of the value of critical minerals needing to be sourced from the United States or a free trade partner for a separate $3,750 credit.

Toyota Tsusho plays a significant role in raw material procurement for Toyota Motor Corp. Cathodes, composed of nickel, cobalt, manganese, and aluminum, are a critical component of lithium-ion batteries, with their mineral composition and manufacturing technology determining an electric vehicle's capacity and lifespan.

Following Toyota Tsusho's investment, LG Chem holds a 51 percent stake in the Gumi plant, while China's Huayou Cobalt Co. retains 24 percent.