EcoPro BM on a roll on chain deal with EV battery majors Samsung and SK

2020.02.11 14:57:09 | 2020.02.11 15:46:47

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EcoPro BM, a South Korean battery material manufacturer, is on a roll, with its stock testing a 52-week high after it became chased by top battery makers Samsung SDI and SK Innovation.

On Monday, the Kosdaq-listed company reported that it would set a joint venture with Samsung SDI this month to produce next-gen cathode materials from 2022 in Pohang.

EcoPro BM will invest 72 billion won ($60.8 million) into the JV named EcoPro EM, and Samsung SDI 48 billon won by 2021.

The partnership between Korea’s leading secondary battery maker and key battery material manufacturer is designed to better respond to fast-growing market demands driven by the surge in electric vehicles as well as autonomous features in vehicles. All cathode materials from the JV will be supplied solely to Samsung SDI. The transaction represents a stable supply of materials for Samsung SDI and a reliable customer base for EcoPro BM.

EcoPro BM shares jumped 12.3 percent Tuesday to finish at 87,600 won after hitting as high as 92,100 won.

The news comes after the company on Feb. 3 won a four-year contract from SK Innovation to deliver 2.7 trillion won worth nickel-management-cobalt (NCM) cathode, an emerging material for Li-ion battery. The supply would double the company’s annual sales.

The stock has gained nearly 40 percent this month thanks to the double wins.

Security in cathode materials translates into the competiveness of EV battery makers.

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Last year Samsung SDI signed a $3.2 billion deal with BMW to supply EV battery cells to the German carmaker from 2021. The largest share of the shipments will come from Samsung SDI’s plant in Hungary and it will require tens of thousands of tons of cathode materials. Cathode materials are usually comprised of nickel, cobalt and manganese in a crystal structure to form a multi-metal oxide material to which lithium is added. But the new batteries to be rolled out next year from the company’s second plant in Hungary will have nickel-cobalt-aluminium oxide (NCA) chemistries, said an analyst report from Meritz Securities last weekend, forecasting

EcoPro BM is the most probable supplier of cathode materials to Samsung SDI given the current market with few comparable companies.

Another reason for the partnership is to prevent technology leakage, according to an industry source. The source said EcoPro BM is known to have material technology provided exclusively to Samsung SDI and the two will maintain technology monopoly through the joint venture.

Samsung SDS’s ranking rose by one notch from 6th place in 2018 to 5th last year by shipping batteries equivalent to 4.2GWh of storage, according to EV battery market tracker SNE Research. The company accounted for 3.6 percent of the global battery market last year, up 0.1 percentage point from the previous year.

By Shin Soo-hyun, Won Ho-sup and Minu Kim

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