Korean Battery Giant LG Energy Solution Invests in Chinese Material Supplier

LG Energy Solution takes strategic stake in Indonesian lithium iron phosphate production facility, becoming both major customer and shareholder

 

Investing in suppliers is a common business strategy to ensure appropriate pricing, rapid response times, quality assurance, comprehensive service, and innovation capabilities. Industry leaders like CATL and BYD have proven themselves adept at such supply chain investments.

 

Now, overseas lithium battery manufacturers are investing in Chinese raw material producers.

 

LG Energy Solution Acquires Stake in Li-Source (Indonesia) 锂源（印尼）

 

On February 22, Jiangsu Lopal Tech 龙蟠科技 (603906.SH) announced that its third-tier controlled subsidiary Li-Source (Indonesia) plans to increase capital and introduce new investors. LG Energy Solution will invest approximately $15.97 million (roughly RMB 116 million) to subscribe for 255,930.64 newly issued ordinary shares of Li-Source (Indonesia), **acquiring 20% equity after the completion of the new share issuance.

source：Jiangsu Lopal Tech Co Ltd

Following the transaction, Li-Source (Indonesia) will be 80% controlled by Li-Source (Asia Pacific) and 20% by LG Energy Solution, with Li-Source (Asia Pacific) remaining the controlling shareholder.

source：Jiangsu Lopal Tech Co Ltd

Li-Source (Asia Pacific) is a wholly-owned subsidiary of Changzhou Li-Source. Changzhou Li-Source is controlled by Lopal Tech and focuses on the research and production of lithium iron phosphate (LFP) cathode materials.

 

Notably, the third-largest shareholder of Changzhou Li-Source is Ningbo Meishan Bonded Port Area Wending Investment Co., Ltd. (holding 5.9104%), which is a wholly-owned subsidiary of CATL.

 

Lopal Tech stated that this transaction aligns with its overall strategic development plan and long-term interests. It represents an important initiative to expand into overseas markets and will strengthen the company's overall capabilities in project development, market expansion, and mass production in the LFP cathode material supply chain. The investment will enhance the financial strength of its third-tier subsidiary, further improving its risk resistance and market competitiveness while meeting subsequent development funding requirements, which holds positive strategic significance for the company.

 

From Major Customer to Second-Largest Shareholder

 

LG Energy Solution is a major customer of Li-Source (Indonesia).

 

According to Lopal Tech's "Progress Announcement on Signing Major Contracts for Daily Operations" released on December 24, 2024, its controlled subsidiary Changzhou Li-Source and third-tier controlled subsidiary Li-Source (Asia Pacific) signed an "Amendment Agreement" with LG Energy Solution.

 

The agreement stipulates that Li-Source (Asia Pacific) will become a supplier to LG Energy Solution. Between 2024 and 2028, Changzhou Li-Source and Li-Source (Asia Pacific) will collectively sell 260,000 tons of LFP cathode materials to LG Energy Solution, with the agreement effective from December 24, 2024.

 

Based on market price calculations, the overall market value of this order approaches RMB 10 billion. This represents the largest transaction contract signed in the global LFP market in 2024.

 

Now, with this equity transaction, LG Energy Solution is not only a major customer of Li-Source (Indonesia) but also one of its shareholders.

 

Regarding production capacity, Li-Source (Indonesia)'s 30,000-ton LFP project located in Indonesia's Kendari Industrial Park officially broke ground in July 2023 and successfully completed construction and began operations in 2024.

Source：Lopal Tech

The project shipped its first batch of products in January 2025. The factory currently has the capacity to produce fourth-generation high-density products, and the low-temperature spherical T-series products designed specifically for low-temperature environments have also been incorporated into production plans.

 

Additionally, Li-Source (Asia Pacific)'s second-phase 90,000-ton LFP capacity in Indonesia will officially begin production in 2025.

 

LG Energy Solution Expands LFP Battery Strategy

 

LG Energy Solution had previously announced plans to produce LFP batteries and has secured several major LFP battery orders.

 

For example, in July 2024, LG Energy Solution announced it would supply LFP batteries to Renault's electric vehicle division, Ampere. According to the agreement, LG Energy Solution will provide approximately 39GWh of LFP batteries to Ampere from late 2025 to 2030, sufficient for producing 590,000 electric vehicles.

 

These LFP power batteries will be produced at LG Energy Solution's Polish factory and will be installed in Ampere's next-generation electric vehicle models.

 

Furthermore, LG Energy Solution's medium to long-term planning indicates that it will enhance its market competitiveness in LFP and LMFP (lithium manganese iron phosphate) batteries. Based on this strategy, LG Energy Solution has signed LFP cathode material partnerships with multiple Chinese cathode material manufacturers. For instance, in addition to its cooperation with Changzhou Li-Source, LG Energy Solution previously signed an agreement with Huayou Cobalt to jointly build an LFP cathode material plant in Morocco. This factory is expected to begin production in 2026 with a target annual production of 50,000 tons of LFP cathode materials, planned for supply to the North American market.