(Yicai) Sept. 25 -- Huayou Cobalt and LG Chem have agreed to build three more joint electric vehicle battery material plants overseas in an effort to create global industrial supply chains that meet the requirements of the United States’ Inflation Reduction Act.

The Chinese battery material supplier and the South Korean EV battery maker will set up nickel ore processing and lithium battery cathode precursors factories in Indonesia and a lithium salt processing plant in Morocco, Jiaxing-based Huayou Cobalt said yesterday, citing a non-binding agreement the pair signed on Sept. 22.

The nickel ore plant is expected to make compounds with an annual output capacity equal to 60,000 tons of metallic nickel, while the cathode precursors plant will have annual production of 50,000 tons, the firm noted. The factory in Morocco will be able to produce 52,000 tons of lithium salt per year, it added.

The production capacities of the lithium battery cathode precursors and lithium salt plants can be further expanded based on market demand, Huayou Cobalt said. 

Cathode precursors are raw materials used to produce lithium batteries, while lithium salts and nickel compounds are major raw materials used to make cathode precursors. 

The agreement shows the two are expanding their collaboration to the lithium battery upper-stream raw materials field after agreeing to build a JV factory for ternary lithium battery cathode materials in South Korea in April.

Huayou Cobalt and LG Chem also agreed that the investment in the Indonesian and Moroccan factories and that the business plan and equity holding structure of the JVs will meet the requirements of the US Inflation Reduction Act, the Chinese company pointed out.

That act and the European Union’s stricter foreign trade rules have prompted Chinese battery material makers to build JV production facilities abroad. In May, Huayou Cobalt also said it planned a JV factory for ternary cathode materials for South Korea with local cathode and anode materials maker Posco Future M, while in March GEM said it would also set up a JV plant in South Korea.

Shares of Huayou Cobalt [SHA: 603799] fell 0.9 percent to close at CN37.95 (USD5.19) apiece in Shanghai today. The stock is down 32 percent since the end of last year.

Editor: Martin Kadiev