Korea Zinc Ventures into Competitive Battery Market
Korea Zinc, the world's largest zinc and lead smelter, is poised to become a supplier of copper foil, a crucial component for battery manufacturing, to LG Energy Solution Ltd., the world's second-largest battery maker. The company is currently providing sample supplies to LG Energy after successfully passing tests on LG batteries. If a formal agreement is reached, mass production of copper foil will commence, and deliveries will be made to LG's domestic plant in Ochang, North Chungcheong Province.
Korea Zinc has ambitious plans to extend its supply of battery materials to Ultium Cells LLC, a battery manufacturing joint venture between LG and General Motors in the United States. To achieve this, the company produces copper foil through its affiliate, KZAM Corp., which began commercial operations in the first quarter. KZAM aims to reach an annual production capacity of 13,000 tons by the end of the year, generating potential annual revenue of up to 280 billion won ($221 million).
Copper foil plays a critical role in the manufacturing of safer, high-density rechargeable batteries, surrounding the anode, which is the negative end of a lithium-ion battery. It accounts for approximately 5-6% of battery cell manufacturing costs and is priced at $14-$17 per ton.
Korea Zinc has a history of collaboration with LG Group affiliates, including a joint venture established in 2018 with LG Energy's parent company, LG Chem, to produce nickel sulfate, a raw material for lithium-ion batteries. Additionally, they signed a comprehensive battery material business contract last year and are building a precursor JV, aiming to strengthen their foothold in the battery materials market.
However, the copper foil market is facing challenges due to a supply glut, with SK Nexilis currently holding the largest market share at 22%. China's Londian Wason Holdings and Taiwan's Chang Chun Group follow closely with 19% and 18% market shares, respectively. Lotte Energy Materials Corp. (formerly Iljin Materials Co.) ranks fourth with a 13% share.
To remain competitive in this challenging market, Korean companies are advised to focus on high-end, wide-size products. Lotte Energy has already made strides in this direction, developing a new ultra-high tensile elecfoil that enhances the mileage, power, and stability of electric vehicles. Lotte's clients include China's BYD, as well as Korean companies Samsung SDI and LG Energy. Despite the competition, Korea Zinc is determined to secure its position as a significant player in the battery materials industry.
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