South Korea: L&F Secures 250,000-Ton LFP Order, Plans to Expand 2028 Production Capacity by 120,000 Tons

[Comprehensive] L&F Secures 250,000-Ton LFP Order... Expanding 2028 Production Capacity by 120,000 Tons

[Comprehensive] L&F Secures 250,000-Ton LFP Order... Expanding 2028 Production Capacity by 120,000 Tons

[Comprehensive] Enefert Secures 250,000-Ton LFP Order... Expanding 2028 Production Capacity by 120,000 Tons

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[Digital Daily, reporter Goh Seong-hyun] L&F is aiming to improve its performance through large-scale orders for lithium iron phosphate (LFP) cathode materials and an increased supply of high-nickel cathode materials for 46-series cylindrical batteries. The company has secured a medium- to long-term supply volume of 250,000 tons of LFP cathode materials, primarily targeting the North American energy storage system (ESS) market, while also increasing shipments of ternary (NCM) cathode materials for 46-series batteries.

The company is also pushing to expand its medium- to long-term production capacity. To address the growing demand for non-China supply, L&F plans to increase its LFP cathode material production capacity to 120,000 tons per year by 2028, while optimizing NCM production to improve profitability.

On the 5th, L&F announced in its Q3 earnings conference call that it recorded consolidated revenue of 874.4 billion won and an operating loss of 26.5 billion won. Revenue increased by 34.0% year-on-year but decreased by 1.2% compared to the previous quarter. Operating profit turned into a loss, reversing from a profit of 22.1 billion won in Q3 last year and 20.8 billion won in Q2 this year.

The shift to a loss in Q3 was influenced by falling raw material prices and exchange rates. A sharp drop in raw material prices resulted in an inventory valuation loss of 42.6 billion won, and the decline in the won-dollar exchange rate reflected a loss of approximately 22 billion won. However, with continued shipments of high-nickel cathode materials, the cumulative operating profit for this year reached 111.6 billion won.

Ryu Seung-heon, Chief Financial Officer (CFO) and President of L&F, stated, "We recorded disappointing results due to losses from the simultaneous decline in raw material prices and exchange rates. Excluding external factors, we have maintained solid profitability as our utilization rate recovers."

For Q4, the company projected that NCM shipment volumes would increase by 6% to 9% compared to the previous quarter, driven by expanded electric vehicle sales among end customers in North America and increased new supply of cathode materials for 46-series batteries. It also expected that the annual NCM shipment volume for this year would increase by approximately 40% compared to last year, setting a new record high.

In terms of profitability, some pressure from falling raw material prices is expected to persist. The average selling price of NCM cathode materials in Q4 is projected to decline by approximately 3% compared to the previous quarter. However, the company anticipates that the burden of inventory valuation losses will gradually decrease as the expansion of LFP cathode material production accelerates the consumption of existing raw material inventory.

The LFP cathode material business is seeing a full-scale ramp-up in new orders and production expansion. L&F began supplying LFP cathode materials to the North American energy storage system (ESS) market at the end of the third quarter this year. The company has signed medium- to long-term supply contracts with a total of four customers, including three major domestic battery cell manufacturers and one overseas client, securing a total volume of 250,000 tons. This corresponds to approximately 100 GWh in ESS battery capacity.

Based on this, the company plans to produce approximately 3,000 tons of LFP cathode materials this year, with shipment volumes increasing to 40,000 tons in 2027 and over 60,000 tons in 2028. Notably, a recent contract with LG Energy Solution has secured an additional supply volume of over 30,000 tons annually from 2028 onward.

Jang Seong-gyu, Chief Production Officer (CPO) of L&F, stated, “With major domestic customers expanding ESS production and regulations on Chinese materials tightening, demand for non-Chinese supply is increasing. We are actively discussing additional supply with new customers and aim to establish the LFP business as a stable revenue base.”

L&F is also expanding its LFP production capacity. The company plans to secure an additional 60,000 tons of annual production capacity by the second half of 2028, building a mass production system with a total capacity of 120,000 tons. It has already secured the land required for expansion and intends to establish a separate dedicated production line rather than converting existing NCM lines to LFP.

CPO Jang noted, “Shipment volumes in the NCM business continue to grow, so there is little need to convert existing production lines. Since NCM and LFP have different production processes, converting existing equipment could reduce production capacity by more than half. Therefore, expanding a separate dedicated line is more efficient.”

Additional investment funds will primarily be sourced directly through L&F Plus, the subsidiary responsible for the LFP business. The company plans to utilize policy finance and, if necessary, combine debt financing and the recruitment of financial investors (FIs) to minimize the investment burden on the parent company.

Cho Jung-hoon, Head of the Management Control Division at L&F, explained, “Considering the medium- to long-term supply volumes already secured and the potential for additional orders, expanding production capacity is necessary. We will prioritize policy finance and, if needed, raise funds through external debt and the recruitment of FIs.”

The company also emphasized that it continues to be the sole supplier of NCM high-nickel cathode materials, its core business, to existing customers. The market had previously expected LG Chem to enter the ultra-high-nickel (Ni 95% or higher) cathode supply chain for Tesla by leveraging its ties with its subsidiary, LG Energy Solution. However, L&F maintains that it continues to be the sole supplier of its flagship products in the fourth quarter.

Lee Byung-hee, Chief Operating Officer (COO) of L&F, stated, "The sole supply of our flagship ultra-high-nickel products continues in the fourth quarter. Considering the current stable supply structure and technological competitiveness, the possibility of changes in the supply structure in the short term is limited."

The proportion of cathode materials for 46-series cylindrical batteries supplied to new North American customers reached 10% of total NCM shipments in the third quarter. Volumes for the North American project, which began supply at the end of last year, are increasing, and projects for new customers are scheduled to begin supply in 2027. L&F expects its NCM shipment volume next year to increase by at least 10% compared to this year, and the proportion of cathode materials for 46-series batteries to expand to 40% of total NCM shipments.

The company is also expanding its business scope into new markets beyond electric vehicles and energy storage systems (ESS). It anticipates growing demand for high-power, high-energy batteries in the robotics sector, including humanoid robots, and is consulting with relevant companies on technical requirements and product application possibilities.

L&F is also developing cathode materials for sodium-ion batteries. It is focusing on the development of multi-ion NFPP materials that can be used for ESS, and plans to leverage its existing LFP production experience to adapt to future market expansion.

Jang, CPO, stated, "While it is difficult for sodium-ion batteries to completely replace LFP in the short term, new demand may form, centered on the ESS market, as technology advances and commercialization progresses. We are preparing to respond to market expansion by utilizing our existing LFP-dedicated production system and mass production experience."

[Comprehensive] L&F Secures 250,000-Ton LFP Order... Expanding Production Capacity to 120,000 Tons by 2028

[Comprehensive] L&F, 250,000-ton LFP order… 2028 production capacity expansion by 120,000 tons

[Comprehensive] L&F, 250,000-ton LFP order... 2028 production capacity expansion to 120,000 tons

[Comprehensive] Enef, Secures 250,000-Ton LFP Order... Expands 2028 Production Capacity by 120,000 Tons

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[Comprehensive] L&F Secures 250,000-Ton LFP Order... Expanding 2028 Production Capacity by 120,000 Tons

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