LG Energy Solution's factory in Nanjing / Courtesy of LG Energy Solution

By Park Jae-hyuk

LG Energy Solution (LGES) signed a memorandum of understanding with Huayou Cobalt to set up a joint venture for battery recycling in China, the Korean firm said Tuesday. This is the first such venture by Korean and Chinese companies for battery recycling in China.

Both companies plan to finish establishing the body by the end of this year, after discussing details of its operation.

According to LGES, the new company will extract nickel, cobalt and lithium from scraps and waste batteries. The extracted materials will be used for the production of cathode materials which will be supplied to the Korean firm's electric vehicle battery plant in Nanjing.

A pre-treatment factory processing scraps and waste batteries will be located near LGES' manufacturing plant in Nanjing. A post-treatment factory producing cathode materials using the extracted materials will be located in Quzhou, where Huayou Cobalt has its operations.

"For a sustainable and stable battery supply chain, it is necessary to establish a virtuous cycle of resources," LGES CEO Kwon Young-soo said. "The recent collaboration enabled stable supply of raw materials and better cost competitiveness. It was also meaningful in terms of ESG management."

Huayou Cobalt Chairman Chen Xuehua said that the recent partnership will allow his company to consolidate its ties with LGES.

"Both companies will make efforts to establish virtuous cycles of the production of eco-friendly and high-quality batteries," he said.

The Chinese company is the country's largest producer of cobalt. In 2019, it joined hands with LG Chem, the parent of LGES, to establish a joint venture for precursor production in Quzhou and another one for cathode material production in Wuxi. Huayou Cobalt and LG Chem also set up a venture this year for cathode material production in Gumi, North Gyeongsang Province.