LG Chem and Toyota Tsusho Corporation have finalized an agreement under which Toyota Tsusho acquires a 25% equity stake in LG Chem’s cathode materials manufacturing joint venture, LG-HY BCM, based in Gumi, South Korea. With this transaction, LG Chem retains 51% ownership, while Huayou Cobalt’s stake adjusts to 24%, ensuring the venture aligns with the revised Prohibited Foreign Entity (PFE) threshold introduced in July 2025 for U.S. Inflation Reduction Act compliance.
By meeting the PFE requirement—where no single restricted party may hold more than 25%—the partnership clears the way for U.S. tax credits related to domestic clean-energy supply chains. Toyota Tsusho, the trading and procurement arm of the Toyota Group, will channel a portion of the plant’s cathode active materials output to battery manufacturers serving the North American electric vehicle market.
The Gumi facility, with an annual production capacity of 66,000 metric tons, employs LG Chem’s proprietary Precursor Free (LGPF) process. This technology streamlines cathode production by directly sintering tailored metal feedstocks, eliminating the need for separate precursor steps. The method is touted for improving cost efficiency and reducing process complexity, bolstering LG Chem’s competitive position in the global battery-materials sector.
LG Chem is simultaneously scaling its manufacturing footprint. In South Korea, operations continue at Cheongju and Gumi sites, while a new U.S. plant in Tennessee is slated to begin production in the second half of 2026. In China, facilities in Wuxi further diversify the company’s supply network.
In recent years, LG Chem has secured high-value agreements, including a supply contract valued at approximately KRW 25 trillion in early 2024—sufficient for more than 5 million electric vehicles—and an additional deal that same year with Prime Planet Energy & Solutions, a Toyota-Panasonic battery joint venture. In 2023, the company also inked a multi-year, KRW 2.9 trillion cathode supply agreement with Toyota Motor Engineering & Manufacturing North America.
LG Chem CEO Shin Hak-cheol said: “Toyota Tsusho’s equity participation marks a pivotal turning point as LG Chem strengthens its cathode supply competitiveness under the U.S. IRA framework. We will further solidify our leadership in the battery materials market on the strength of world-class products and powerful global partnerships.”
Source: LG Corp Media Release
