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LG Energy Solution Ltd (LGES) has signed a preliminary agreement to establish a joint venture with Chinese mining company Zhejiang Huayou Cobalt Company to build electric vehicle (EV) battery recycling facilities to strengthen the supply of raw materials for its lithium-ion batteries.

South Korea’s top EV battery manufacturer said the two companies planned to build two factories in China to extract and process nickel, cobalt and lithium from scrapped lithium-ion EV batteries.

A pre-treatment plant to processes scrapped batteries would be built on the site of LGES’ existing battery factory in Nanjing while a plant to processes recovered metals would be built near Huayou’s operations in Quzhou city in Zhejiang province.

The terms of the final agreement between LGES and Huayou had yet to be finalised with the joint venture scheduled to be incorporated by the end of this year.

Prices of raw materials for EV batteries have soared over the last year as vehicle manufacturers have stepped up their EV production plans with the price of lithium carbonate in China having increased more than five-fold.

Sales of battery powered EVs in China are expected to exceed 5 million units this year from just over 2.9 million in 2021.

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By GlobalData