LG Chem and Toray have established a joint venture in Hungary to target the European separator market for secondary batteries. The joint venture, called LG Toray Hungary Battery Separator Kft, will be established with a 50:50 shareholding, with LG Chem planning to acquire an additional 20% equity from Toray after 30 months. The plant will be located in Nyergesújfalu, Hungary, and will supply European battery companies, including LG Energy Solution Poland. The two companies aim to secure an annual production capacity of over 800 million square meters by 2028. The European EV battery market is forecasted to grow rapidly, making it an attractive target for the joint venture.
- Joint venture to be established Nyergesújfaly, Hungary.
- Toray and LG Chem have established the joint venture through the investment of US$375 million (around € 360 million) by LG Chem in Toray Industries Hungary Kft. (THU), a wholly owned Toray subsidiary which manufactures and sells separator film for rechargeable lithium-ion batteries in Hungary.
- Joint venture established with 50:50 shareholding.
- LG Chem plans to acquire an additional 20% equity from Toray after 30 months in order to secure management control.
- Plant will begin construction at start of next year, and supply will be made to European battery companies, including LG Energy Solution Poland.
- Expecting synergies for both sides by integrating Toray’s fabric technology with LG Chem’s coating capabilities
- LG Chem : Internalize the fabric required for production of separators and establish local supply system in Europe
- Toray : Secure a stable customer base within Europe including LG Energy Solution, etc.
LG Chem will join hands with the Japanese company Toray to establish a joint venture in Europe related to separators for secondary batteries to target the European separator market. LG Chem announced that the Company signed an agreement to establish the joint venture ‘LG Toray Hungary Battery Separator Kft’, during a ceremony held through video conference with major executives from both companies attending, including Hak Cheol Shin, CEO of LG Chem, and Akihiro Nikkaku, CEO of Toray. The joint venture will be established with a 50:50 shareholding, and LG Chem plans to acquire an additional 20% equity from Toray after 30 months in order to secure management control. Both companies will invest more than 1 trillion Korean won in stages.
The plant will be established on the site of the existing Toray Industries Hungary Kft plant, located in the city of Nyergesújfalu in the Komárom-Esztergom province in northwestern Hungary. The total area is 420,000m2, which is the size of more than 60 football stadiums. Hungary has excellent logistics and transportation convenience in Europe and is adjacent to major customers of LG Chem, including global automobile companies. The favorable geographical conditions make it ideal for the Company to expand the market position in Europe and strengthen local customer responsiveness.
The two companies plan to secure an annual production capacity of more than 800 million square meters until 2028. Line expansion will begin in the first half of next year. The mass-produced separators will be supplied to European battery companies such as LG Energy Solution Polish plant in Borzwaf, Poland
LG Chem and Toray decided to establish the joint venture as the interests of the two companies were aligned. Toray wished to secure a stable customer base within Europe through LG Energy Solution, a subsidiary of LG Chem, while LG Chem wished to rapidly penetrate the European market, which is the global electronic vehicle production hub, by internalizing the fabric technology, a key material of separators. Through the joint venture, Toray has secured a concrete customer base in the European market, while LG Chem will be able to further strengthen its position as a global separator company by adding Toray's differentiated fabric business capabilities to its coating technology.
Hak Cheol Shin, CEO of LG Chem, stated “The establishment of the joint venture with Toray is not just a simple cooperation. It is an innovative change that generates synergy by combining LG Chem's coating technology with the world's best technology such as Toray's fabric capabilities. Using the industry’s highest-level technology, we will actively foster the separator business and endeavor to become the world's no. 1 battery material company.
Targeting the European Markets by establishing joint venture with globally leading separator materials company
Through the joint venture, the two companies have secured the opportunity to penetrate the fast-growing European electronic vehicle market Along with China and the US, the European electronic vehicle market is regarded as one of the three major electronic vehicle markets with rapid growth. According to the global market research company IHS Markit, the European electronic vehicle battery market is forecasted to grow at a CAGR of 38% from 82GWh this year to 410GWh in 2026.
The leading global separator company Toray possesses the industry’s highest level of technology, with numerous original patents such as safety-reinforced three-layer separator with excellent heat resistance.
To become the world’s largest integrated batter materials company, LG Chem acquired the separator coating business from LG Electronics last July, and announced that the Company will grow the separator business into a trillion Korean won scale business within several years.
Currently, coating production lines are operated in Cheongju (Korea), Hangzhou (China) and Wroclaw (Poland).
The Company possesses technological capabilities to maximize productivity, such as the processing capability to coat the separator at the world's fastest speed, having unrivaled cost competitiveness based on a coating speed that is more than twice as fast as its competitors and a wider coating width.
LG Chem and Toray jointly own the SRS® (Safety Reinforced Separator) technology, which significantly improves safety and performance by thinly coating the surface of the separator with a ceramic material.
Based on this, the two companies plan to maximize business synergy by cooperating in the fields of coating processing technology and fabric manufacturing technology, which each company has its own strengths.