LG Chem has signed an agreement to establish a joint venture in Morocco with China’s Huayou Group to produce lithium phosphate iron (LFP) cathode materials for electric vehicle (EV) batteries.

LFP batteries are becoming increasingly popular, particularly in lower segment EVs, as they are cheaper to produce than other widely used batteries such as nickel cobalt manganese (NCM) units and are seen as safer.

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The agreement would allow both companies to enter the LFP battery materials segment and strengthen their existing global cathode materials supply chain business.

LG Chem noted Morocco has a free trade agreement with the US so cathode materials produced by the JV would qualify for tax credits under the US Inflation Reduction Act (IRA).

Morocco has among the world’s largest phosphate reserves.

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Huayou Group’s Youshan unit will work with LG Chem in Morocco to build a precursor plant and a facility with annual capacity for 50,000 tons of cathode materials per year from 2026, enough to power around 500,000 compact EVs.

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The JV would supply LFP cathode materials to LG Energy Solution for use in its US based plants including a factory in Arizona is scheduled to come on stream in 2026.

LG Chem CEO Shin Hak-cheol said in a statement: “We will actively respond to the emerging LFP cathode material market with the Morocco plant as our global base. Our goal is to create a strong, vertically integrated material supply chain, from raw materials to precursors and cathode materials.”

LG Chem said it also planbed to expand into lithium manganese phosphate iron (LMFP) cathode materials, a mixture of manganese and LFP materials which offers improved energy storage capacity and better power output than LFP cathode materials.