Due to the deterioration of the battery market, L&F, which has incurred more than 700 billion won in losses over the past two years, is focusing on High-Ni cathode materials and LFP (lithium iron phosphate) cathode materials to improve its performance. L&F plans to diversify its customer base by re-evaluating its anode material and lithium business that it had promoted as new projects and concentrating on cathode materials, where it has clear strengths.
According to the industry on the 19th, L&F has established an LFP battery pilot line at its third plant in Daegu Guji in the first half of last year and is conducting product tests with domestic and foreign clients. If L&F passes customer tests this year, it plans to begin mass production of LFP cathode materials next year. The company is also considering producing products in the United States.
L&F expects to achieve its highest shipment volume this year for its key product, High-Ni cathode materials. Last year, L&F was the first in the world to mass-produce High-Ni cathode materials with a nickel content of 95% for 46 mm batteries. Starting from the end of the first quarter this year, the company plans to ship new products with 95% nickel content for 2170 (21 mm diameter, 70 mm height) cylindrical batteries. The company aims to have 75% of its total sales in 2027 come from High-Ni cathode materials and 25% from LFP cathode materials, targeting both the high-performance electric vehicle market and the mid-to-low priced electric vehicle market.
L&F recorded a cumulative loss of 732.5 billion won from 2023 to 2024, experiencing the largest performance decline among domestic cathode material companies. This was influenced by expectations of rapid growth in the electric vehicle market, which led to securing minerals like lithium at high prices in the past. In the third quarter of 2023, L&F's inventories amounted to 1.444 trillion won, an increase of more than 500 billion won compared to the same period last year. However, in the fourth quarter of the same year, lithium prices plummeted, resulting in a loss of 250.3 billion won in inventory asset valuation. The decline in lithium prices continued last year, leading to ongoing inventory losses.
Recently, L&F is re-evaluating its anode material business, which it had promoted as a new project, considering the changing market conditions. Last year, the company entered into a memorandum of understanding (MOU) with Japan's Mitsubishi Chemical to establish a joint venture for the anode material business. However, since the second half of the same year, the battery market has deteriorated significantly, prolonging negotiations between the two parties and creating an environment that makes it difficult to continue the business. The operating rate of POSCO FUTURE M, which is the only company producing anode materials in South Korea, was only about 30% last year.
The lithium tolling business, which was promoted as a new project, has deteriorated in feasibility due to falling mineral prices. Lithium carbonate is mainly used in LFP batteries, while lithium hydroxide is used in ternary batteries. The price of lithium hydroxide, which exceeded $70,000 per ton in early 2023, has now dropped to just above $10,000.
L&F has decided to focus on cathode materials that have strengths, such as High-Ni and LFP batteries, to improve performance. L&F is known to supply High-Ni cathode materials for 2170 cylindrical batteries produced at LG Energy Solution's Nanjing plant, which are installed in Tesla's Model Y Juniper vehicles. In the case of LFP cathode materials, the company is continuing sales activities to expand its client base not only domestically but also in North America and Japan.
Jung Won-seok, a researcher at iM Securities, said, "If L&F secures additional growth potential through diversifying its customer base and expanding its LFP product portfolio, it will show the most stable performance growth among domestic cathode material companies."