L&F plans Q3 mass production, becoming the first non-Chinese LFP cathode maker while POSCO FUTURE M and EcoPro BM also expand capacity as U.S. tax rules favor non-Chinese materials
An employee checking the manufacturing process at the precursor production plant completed by POSCO FUTURE M in Gwangyang, Jeollanam-do in June 2025 (Photo provided by POSCO FUTURE M).
Domestic battery materials companies are speeding up the production of lithium iron phosphate (LFP) battery materials. As domestic battery cell companies begin to produce LFP batteries, which are dominated by Chinese companies, moving beyond ternary batteries such as nickel, cobalt, and manganese (NCM), materials companies have also stepped up to respond.
With the Donald Trump administration in the United States strengthening its policy to decouple the battery supply chain from China, the domestic competitiveness of Korean battery materials companies is expected to rise further. According to current plans, Korean battery materials companies will secure a production capacity of approximately 200,000 tons by 2027.
According to the battery industry on May 20, L&F recently completed a dedicated LFP cathode material plant in Daegu under its subsidiary ‘L&F Plus,’ which is solely responsible for battery cathode material production. From the third quarter of this year, the plant will begin producing LFP cathode materials at an annual scale of 30,000 tons. In a situation where Chinese companies supply about 95% of the global LFP cathode materials, L&F is the first non-Chinese company to mass-produce LFP cathode materials. The company plans to increase its LFP cathode material production capacity to 60,000 tons annually by the first half of 2027.
The LFP cathode materials produced at the Daegu plant will be supplied to the Samsung SDI joint venture plant in the United States. Previously, in March, L&F signed a contract with Samsung SDI to supply LFP cathode materials worth a total of 1.6 trillion (approximately $1.06 billion) for three years until December 2029. Samsung SDI plans to utilize the LFP cathode materials secured from L&F to produce LFP batteries for energy storage systems (ESS) starting in the fourth quarter of this year at StarPlus Energy (SPE), a joint venture with Stellantis located in Indiana, USA.
POSCO FUTURE M is building a dedicated LFP cathode material plant in Pohang, Gyeongsangbuk-do, with the goal of mass production in 2027. The plant construction plan was approved by the board of directors in December of last year, and construction will begin soon. Upon completion, it is expected to be capable of mass-producing up to 50,000 tons of LFP cathode materials annually. To enter the market early, the company is also in the process of converting a part of the production line at its existing Pohang ternary cathode material plant into an LFP cathode material production line. The initial volume of LFP cathode materials produced through this will be released at the end of this year.
The plant that produces precursors, the preceding stage of cathode materials, was completed in Gwangyang, Jeollanam-do in June of last year. It has a scale capable of producing 45,000 tons annually. The plant producing spherical graphite, an intermediate raw material for battery anode materials, is planned to be completed in Saemangeum in 2027, the first in the domestic industry, to produce 37,000 tons annually. POSCO Group secures and supplies nickel, a precursor fuel, from Australia and Argentina, and natural graphite, a raw material for spherical graphite, from Africa.
EcoPro BM has completed the development of a precursor-free LFP cathode material that completely eliminates precursors, which have a high dependence on Chinese imports. Equipment for pilot production of this was brought into the Ochang plant in Chungcheongbuk-do at the end of last year. In addition, a quasi-mass production line for LFP cathode materials with an annual production capacity of 4,000 tons has been equipped at the Ochang plant. Although EcoPro BM has completed technological development and production facility investment for the mass production of LFP cathode materials, the company’s policy is to decide whether to enter large-scale mass production through additional investments after consulting with client companies.
Starting with LG Energy Solution mass-producing LFP batteries for ESS at its standalone plant in Holland, Michigan in June of last year, domestic battery cell companies have begun mass-producing LFP batteries in earnest, centering on US production bases. LG Energy Solution will also mass-produce LFP batteries for ESS at its GM joint venture plant in Spring Hill, Tennessee, starting in the second quarter of this year.
Samsung SDI is preparing to convert its line to LFP batteries for ESS with the goal of operation in the fourth quarter of this year, following the start of NCA battery production for ESS at the Stellantis joint venture plant in Indiana, USA in October of last year. SK On will begin mass-producing LFP batteries for ESS starting at the end of this year. To this end, the company plans to convert a portion of the electric vehicle battery production line at its Georgia plant in the US into an ESS line.
However, according to the US tax reduction act ‘One Big Beautiful Bill Act’ (OBBBA) enacted in July of last year, batteries produced in North America must meet the Material Assistance Cost Ratio (MACR) to receive the Advanced Manufacturing Production Credit (AMPC). MACR refers to the proportion of direct material costs, such as cathode and anode materials used in battery production, that are not procured from a Prohibited Foreign Entity (PFE) such as China.
The MACR starts at 60% this year and increases by 5%p every year, rising by 10%p in 2028 to reach 85% from 2030. This is an opportunity for domestic battery materials companies. It is a structure where it becomes increasingly difficult to receive the AMPC unless various materials previously supplied by Chinese battery materials companies are replaced with non-Chinese ones, and Korean products are virtually the only alternatives to Chinese ones.
A battery industry official said, “Domestic battery cell companies that have jumped into the US ESS market now face a structure where they have no choice but to use Korean materials instead of Chinese ones to receive tax benefits,” adding, “Triggered by the US government’s policy to decouple the supply chain from China, the K-battery win-win cooperation system, which connects battery cell companies to materials companies, is expected to be strengthened.”
Michael Herh
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