The relationship betwen LG Chem and Shanghai Energy New Materials Technology Co., Ltd. (Semcorp), a Chinese Lithuim-ion battery separator (LiBS) company. The company decided to receive separator membranes from Semcorp for five years.
On the 23rd, Semcorp announced that it has signed a contract for the supply of wet separation membranes of 617 million dollars (about 730 billion won) with LG Chem through a local securities network. The contract was entered into on April 4th, and the contract term is five years. The separation membrane is utilized as a base film. The base film is applied with LG Chem's unique coating technology, which is then applied to the battery.
LG Chem signed a 720 billion won separation membrane supply contract to prepare for the expansion of battery production due to electrical vehicle (EV) demand. LG Chem has increased its battery production capacity target every year. In 2017, the company announced the plan for the capacity to grow to 70 gigawatts (GWh) by 2020, which was upgraded to 90 GWh in the second quarter of last year. And, in the fourth quarter, the company announced that it will expand 20% more, resulting in 100 to 110 GWh.
According to Semcorp, LG Chem is one of its strategic customers. In 2018, Semcorp posted sales of 153 million yuan (about 26 billion won) in relation to LG Chem. It accounts for 11.5% of total separation membrane sales. LG Chem is also closely related to the Chinese membrane industry. In 2015, it has signed a licensing agreement with Shezhen Senior Technology, another China separation membrane company, for SRS (safety reinforcement separation membrane) related patents. In addition to these two companies, Japan's Toray and ILJIN Group's ILJIN Materials in Korea are supplying separation membranes to LG Chem.
The company is also working to secure battery core materials such as lithium as well as separation membranes. Last year, it signed a long-term contract to receive lithium hydroxide with Ganfeng Lithium of China and Nemaska Lithium of Canada. Lithium hydroxide is used in electric vehicle batteries. Lithium carbonate is for laptop and smartphone batteries.
Semcorp accounted for 14% of the worldwide separation membrane market and 45% of China last year. The yearly production capacity is 1.3 billion square meters (㎡). The production capacity this year is expected to reach 1.5 billion ㎡ and 2.8 billion ㎡ next year.