[영상] POSCO Chemical, which goes through L&F cathode material LG, to Tesla, should also pay attention.

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Han: Hello. This is Joo-yeop Han. Today, I will talk about L&F with Lee Soo-hwan.

Lee: Hello. This is Lee Soo-hwan.

Han: Today’s shooting date is December 17th. You hit the upper limit on December 16th. This company.

Lee: It’s up.

Han: It was enormous and there was a public announcement that day, right?

Lee: A public announcement came out that day.

Han: What kind of disclosure was it?

Lee: We supply LG Energy Solutions and cathode materials worth KRW 1.454.7 trillion. Until December 31, 2022.

Han: What time did the announcement come out?

Lee: I remember it around 11 am.

Han: Two hours before the public announcement, the article first appeared.

Lee: There was an article. It’s like’imminent contract’.

Han: After the public announcement, the stock price surged.

Lee: It has risen vertically.

Han: Actually, L&F is also L&F, but there will be a chance to talk about it again later, but there is also a company called Samhwa Paint.

Lee: I think we have something to tell you about that. Samhwa Paint came out, but it was epoxy resin, right?

Han: What goes into packaging.

Lee: But there are 3 companies in Korea that do epoxy resin. One of the biggest is Kukdo Chemical. When I asked Kukdo Chemical, I thought it wasn’t a big deal.

Han: I don’t know if the technology transfer is a single transfer contract for technology transfer developed by a research institute. Usually, I don’t sign a single contract.

Lee: In addition, there is no such content that it will be commercialized.

Han: Actually, I don’t know if I rose because of that, but when I looked up and looked up, there were such stories. I hit the 30% upper limit yesterday and I was still hitting the upper limit until this morning. Anyway, I wasn’t trying to talk about it today. When we try to talk, we keep falling for different stories. Sorry. L&F is a company that does cathode materials. Are there any domestic cathode material companies? Besides here.

Lee: Representatively, four companies are selected. Ecopro BM, POSCO Chemical, Cosmo Advanced Materials, and L&F.

Han: What is Cosmo Advanced Materials? Isn’t the sales volume a little low compared to the other three companies?

Lee: Of course, it was listed, but among the cathode materials, I used a lot of small cathode materials. What goes into a cell phone or something like this. Now L&F, Ecopro BM and POSCO Chemical are electric vehicles. It has a lot more. Then there was a big difference.

Han: To make it easier to understand, aren’t there three major battery makers in Korea? Who does Samsung SDI accept cathode materials from?

Lee: First of all, there is one company that has no interest in common. Yumicore. There is also a factory in Cheonan in Korea. After Yumicore.

Han: Which country company is it?

Lee: This is a Belgian company. Then Ecopro BM.

Han: It is very sticky with Ecopro BM.

Lee: Then Sumitomo.

Han: Sumitomo of Japan

Lee: I’m using this kind of cathode material.

Han: Where do you get SK Innovation?

Lee: Most of them are received from Ecopro BM. Now, about 10 domestic and foreign companies known to supply cathode materials to SK Innovation are waiting in line.

Han: There will be diversification.

Lee: You just have to pass the qual. Looking at Qual now, a lot of companies have passed. SK Innovation can choose the company’s cathode material.

Han: Where do you get many LG energy solutions that will be important today?

Lee: First, there is a sticky vendor. It is Nichia. Nichia in Japan. Nichia is famous as a company that is also very good at LED.

One: Blue LED. Are you Shuji Nakamoto? Nobel prize winner…

Lee: The one who received it with blue LED before. Nichia is a company that had a lot of deals with LG Display among LEDs as its main trading company.

Han: I’m sorry. This is Shuji Nakamura.

Lee: Because of that, I have maintained a very strong relationship with LG Chem until now. Then, another company of L&F is Yumicore. After that, the rest is internalizing. You can see it like this.

Han: cathode material. Whenever we talk about batteries, cathode materials are cathode materials, anode materials, separators, electrolytes. Of the four battery elements, the cathode material accounts for a large proportion of the cost.

Lee: Not only because of the cost ratio but also because the cathode material is increasing the energy density. When making a battery, the cost ratio is not small. The proportion of battery costs in all electric vehicles is gradually decreasing.

Han: Why?

Lee: First of all, the price of batteries is falling. The share of the finished car. However, in batteries, cathode materials still account for 30-40% of the cost ratio.

Han: We are going to talk about a company called L&F. L&F is also related to LG.

Lee: LG’s collateral.

Han: Heo series.

Lee: Heo’s family. It is well known, but the LG Group is a company formed by the partnership between the Gu family and the Heo family.

Han: Although the division was done.

Lee: Although the division was completely separated, L&F can be viewed as a company affiliated with GS Heo.

Han: How is it going now?

Lee: I have to look at the family tree. Simply put, Chairman Man-Jung Heo is the co-founder of LG Group. Because Chairman Man-Jung Heo said let’s do it with President In-hoe Gu. The second son of Chairman Man-Jung Heo is the second son of Chairman Heo Hak-gu. The son of Chairman Heo Hak-gu is Chairman Heo Jeon-soo. Chairman Huh Jeon-soo’s son is Heo Jae-hong. This person is the representative of L&F now. So, the fourth generation of GS founder.

Han: After seeing the announcement. I was born in the mid 70s.

Lee: Was you born in 76? It was born in 76. And I have a younger brother. I have a younger brother, and he was born in 78. Brother Lee is doing what is commonly referred to as’brother management’. To L&F.

Han: Anyway, with LG. Isn’t it a very distant relative to Chairman Gwang-mo Koo now?

Lee: I am not a relative, I am not related to blood. But what they have in common is that they are both descendants of some founder and the fourth generation of the founder. They have the same common denominator. It is not related to blood.

Han: Originally, it’s LG Chem. in the past. Did you keep working with LG Chem’s battery business?

Lee: I was doing it. L&F was born in 2000. It appears as a subsidiary of a company called Sinix. Sinnix is ​​now the predecessor of LG Display, LG Philips LCD, commonly referred to as’LFL’. I started L&F in 2000 to make LCD backlight unit (BLU) for this company. Then, I started doing battery cathode materials in 2005.

Han: The display backlight and LCD backlight industries have been very booming. It’s almost disappearing now, and now and the touch side is completely dying, right? Panel makers are doing it themselves. You made a good transition.

Lee: In the early 2000s, Chairman Koo Bon-moo, who died now in the early 2000s, said, “We are the way to go, and the battery is the way to go.” Of course, we prepared well from the 90s. L&F was in charge of looking for a company to do with “we should also do cathode materials”.

Han: At the public announcement on the 16th, LG Energy Solutions signed a contract to supply cathode materials worth KRW 1.454.7 billion. Did you just disclose this much? Has the period been disclosed?

Lee: The period is December 31, 2022. For two years.

Han: Isn’t it a very large scale?

Lee: There were three jackpot cathode material contracts this year. In January, POSCO Chemical signed a contract to supply cathode materials for more than KRW 1 trillion three times this year with LG Energy Solution, then LG Chem at 1.853.3 billion won, and Ecopro BM with SK Innovation in February, 2.74 trillion won. There was this.

Han: The amount is the smallest.

Lee: The amount is small, but the term of the contract is key. POSCO Chemical is 3 years and Ecopro BM is also until December 31, 2023. L&F is the shortest in terms of period.

Han: Last year, L&F had sales of about 310 billion won.

Lee: It was an operating deficit.

Han: I think about 380 billion won this year. If it’s 1,454.7 billion won for two years now. Isn’t it that 700 billion won will come from there next year?

Lee: It will plug right away. Of course, the order backlog doesn’t come in just like cutting the tofu into square shape, but they can pull out any amount of sales, right? I don’t know whether to convert it into sales right away, but what is clear anyway is that the supply contract may be lengthened. It has secured several hundred billion won in annual sales.

Han: Is it worth a 30% increase in stocks?

Lee: It is worth climbing.

Han: But at the time of the announcement, LG Energy Solutions and cathode materials of this scale will be supplied anyway. I decided to do it for the next two years. It only came out. This is entering Tesla now.

Lee: For Tesla. The cathode material of the 21700 standard (diameter 21 mm, height 70 mm) standard cylindrical battery for the model 3 produced in China is NCM811, and the cathode material was supplied by POSCO Chemical.

Han: What is NCM811 talking about?

Yi: Nickel, cobalt, manganese, and each component is contained in 8:1:1 after the initials.

Han: 80% or more of nickel.

Lee: But it’s not 80 because it was cut out. There are 81 and 82, so there are some differences from company to company.

Han: But this time, it didn’t come out in the public announcement, but what is it like to sign a supply contract this time?

This: NCMA.

Han: NCMA. What is’A’?

Lee: A is aluminum.

Han: What is the difference between NCM811 and NCMA? There is a video that we explained about this once in the past, so please link to it. Please explain lightly.

Lee: Just’NCM’ literally means three ingredients. It means that nickel, cobalt, and manganese were used as cathode materials. NCMA means that aluminum is added to nickel, cobalt, and manganese. But why do you need this aluminum? Nickel is something we’ve said before, but it’s a big’bowl’ that holds energy. It can contain more, but the more it contains, the more unstable it becomes. Aluminum is added as a material that can compensate for such instability. It is often said, “It is a four-component cathode material.”

Han: So does the capacity increase?

Lee: Of course high nickel. There are also ingredients like this. NCMA doesn’t put a number at the end, right? So, I don’t know how much nickel it contains. But, interestingly, there are quite a few cases where 89% is just 90%. So this is some people say “the nickel content is over 90%”, but it could be 89% actually. Maybe it’s just 90% hit, and I don’t know.

Han: But now, when nickel is added, it becomes unstable, so I added aluminum. Then the capacity will increase, right?

Lee: First of all, since it is high nickel, the energy density has increased.

Han: Compared to the 21700 standard cylindrical battery used by Tesla. How much is NCM811 and how much will it increase with NCMA?

Lee: The battery industry is very much, and it is the electrochemical industry that you need to know its characteristics. It is very simple to increase battery capacity. Just add a lot. But there is a problem. It will cost a lot of money and increase the weight.

Han: There is no space.

Lee: So, there is something Tesla asked for. The standard is the same, so the container is the same, but you have to increase the energy density there. Capacity.

Han: Inside the 21700 battery?

Lee: In it. So this is an innovation in the battery industry. The battery industry’s innovation is that it can hold more energy in the same size. So, the capacity of the 21700 standard cylindrical battery used by the NCM811 was 4700mAh.

Han: 4700mAh.

Lee: But by using NCMA, I increased it to 5000mAh.

Han: Is it going up more than 6%?

Lee: Right. Since the model 3 standard, there are about 6000 cylindrical batteries. On a per cell basis, it is possible to increase the capacity enormously.

Han: It can be said that the mileage increases by 6%.

Lee: You can either increase it like that, or you can reduce the cost by subtracting cells that much.

Han: Now, is it POSCO Chemical that previously traded with LG Chem?

Lee: That’s right.

Han: Does POSCO Chemical not do NCMA?

Lee: Let’s do NCMA. The jackpot contract that I mentioned earlier this January was NCMA anode materials. However, this cathode material is not a cylindrical battery, but a pouch type battery.

Han: Who uses the pouch type battery?

Lee: I use it at UltiumSells, a joint venture between GM and LG Chem. When you go there, it’s the quantity that goes into the US. And now L&F signed a contract for Tesla.

Han: So, is the battery for Tesla’s scent only supplied by L&F?

Lee: Not really. because.

Han: Right now?

Lee: As of now. There are many companies that can make NCMA as rich as LG Energy Solutions wants, so there’s nothing wrong with it.

Han: Right. If you suddenly have a problem, you may have a problem.

Lee: And now L&F’s capacity is only 20,000 tons per year.

Han: You said you decided to increase it.

Lee: I do invest. Just because you invest doesn’t mean that your capacity will suddenly increase, right? I have to increase the amount slowly by installing a factory and a line.

Han: How are you going to plan now?

Lee: The plan is to increase 80,000 tons and 60,000 tons by 2023. It’s just a theoretical paper. In fact, when you look at the case of Ecopro BM, who wanted to increase the capacity a lot earlier, it was just that the total capacity, which is slightly different from what it actually produces.

Han: What is the capacity of Ecopro BM now?

Lee: I know it is about 58,000-59,000.

Han: It makes a lot of difference. Are you still increasing there right now?

Lee: It is increasing tremendously. If we give you a hint here now, it will increase by at least three times as much by 2027.

Han: How much capacity does POSCO Chemical have?

Lee: POSCO Chemical is drawing a very big picture. First, until 2030, it’s a bit distant. Currently 40,000 to 400,000 tons. 10 times 10 times.

Han: For some reason, we do preliminary coverage by analyzing the behavioral patterns of these people or corporate behavioral patterns. I don’t know when it will be, but it may be next year or soon. It can be speculated that if POSCO Chemical signs a new large-sized cathode material contract with LG, it could go into Tesla.

Lee: Doesn’t it have to be justified to increase 10 times from 40,000 tons to 400,000 tons that can be enough? The basis for that is that positive electrode materials will be used as much as the amount of battery consumption around the world. I took that into account.

Han: 40,000 tons now?

Lee: Currently 40,000 tons.

Han: L&F is the smallest.

Lee: It’s POSCO Chemical. In fact, it’s actually being pushed by a huge company called POSCO. The steel industry has less issues, right? As a result, I am actively pushing the battery material at the level of the warrior group. Not long ago, the capital increase was also KRW 1 trillion. More than half of them are paid by the POSCO Group.

Han: Today’s summary is about L&F, but I think I need to pay more attention to POSCO Chemical.

Lee: If you do the dualization, you will surely use POSCO Chemical.

Han: Is there any chance to go further to Nichia?

Lee: I don’t know if Nichia is suitable. You should also look closely at this company. Because the Nichia cathode material is of great quality. The quality is very good. And there are two major Japanese companies, Sumitomo and Nichia. In Sumitomo, most of the volume flows into Panasonic. And most of Nichia’s products go to LG Energy Solutions. the price is expensive. And there is a long-term contract with LG Energy Solutions. So, the capacity internalized by LG Energy Solutions, the capacity to use L&F, POSCO Chemical, and Nichia. In this way, the cathode material is received from the four sources and used. But among them, Nichia is highly likely to be in a very high-end battery in terms of quality and price.

Han: I’ll be here today. thank you.

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