LG Chem, South Korea's premier battery materials producer, announced on Sunday that it would venture into the lithium-phosphate-iron, or LFP, business by constructing a plant with Huayou Group's subsidiary, Youshan.

The two companies will build a LFP cathode material plant in Morocco, a region rich in phosphate rock reserves essential for LFP production.

Set to be operational by 2026, the plant targets an annual output of 50,000 metric tons, sufficient for around 500,000 entry-level electric vehicles.

While LG Chem previously focused on pricier nickel-cobalt-manganese cathodes, this new venture marks their pivot towards the increasingly popular, more cost-effective LFP cathodes.

Morocco will also host a lithium conversion plant under this collaboration. This plant extracts lithium hydroxides and lithium carbonates, crucial for battery electrolytes, from lithium concentrates.

Beyond Morocco, the partnership is exploring Indonesia as a potential site, given its rich nickel reserves. The end goal is to achieve vertical integration in the cathode materials supply chain, spanning from high-pressure acid leaching for metal extraction to the production of battery precursors.

The output from these facilities mainly targets the North American market, in accordance with the US' Inflation Reduction Act, which provides LG Chem subsidies due to Morocco's Free Trade Agreement ties with the US.