€480m for Polish battery gigafactory

€480m for Polish battery gigafactory

Business news |
By Nick Flaherty

Korean battery maker LG Chem has raised €480m for its gigafactory in Poland.

The European Investment Bank says its loan to Polish subsidiary LG Chem Wroclaw Energy is a key part of building vital capacity for battery production. The company plans to build a fully integrated production system that will make all battery components from electrodes to cells, modules and packs for the first time in Europe.

“This first EIB operation with LG Chem Wroclaw Energy is significant for many reasons,” said Teresa Czerwinska, Vice-President of the European Investment Bank, who oversees operations in Poland. “It helps Europe to build a critical mass in electric vehicle battery production at a pivotal time of electric vehicle commercialisation in Europe; it promotes a shift to electromobility and to a greener automotive industry; and it helps create new qualified jobs in an industrial region in transition to a new economic model.

The funding will support the construction of the manufacturing plant for advanced lithium-ion cells and batteries for battery-powered electric vehicles, but the project will also include  technological transfer, the creation of around 1,800 jobs and research and development activities in south west Poland. This will create one of the largest gigafactories in the world.

The financing will be used for the construction and operation of highly automated plant for battery electric vehicles (BEVs). The EIB financing will cover around a third of the total project costs, estimated at €1.5bn, while the rest will come from the company’s own resources and from other financing sources.

Alongside smaller smaller production facilities on the same site, the gigafactory will be a fully smart factory with several newly developed cutting-edge technologies to mass-produce the latest generation of high energy density li-ion electrodes, cells, modules and battery packs. The gigafactory will produce over 35 GWh of battery systems a year, which can potentially power more than 500,000 electric cars.

Next: Gigafactory supply chain 

“The loan provides our company with the resources to create a competitive battery value chain in Europe and Poland. Furthermore, it enables the LG Chem Group to take the lead in terms of growth of the European battery market and community development,” said Jeong Joon Ha, CFO of LG Chem Wroclaw Energy.

LG Chem plans to expand the supply chain in the local area along with the accumulation of critical knowledge, particularly in the area of battery production technologies, creating an eco-system that will help develop innovative solutions for this emerging industry in Europe. The investment has already attracted over a dozen specialised component suppliers and service companies to set up shop in the region with a view to supplying LG Chem as well as other industrial players.

The company also plans to expand its current cooperation programmes with the Technical University of Wroclaw for developing dedicated studies, internships and training. In parallel, the company will expand its technology centre in Wroclaw in order to further improve production processes and develop next generation batteries.

The implementation of the new investment programme will enable the company to ramp up its battery capacity output to around 65 GWh, making the Polish facility one of the largest lithium-ion cell factories in the world. The 1,800 jobs will be created at the Wroclaw site, taking the total workforce up to more than 6,000 full-time employees by the end of 2022.

Through multiple production facilities and an extensive distribution network worldwide, LG Chem employs approximately 40,000 people and generated sales of €21.4bn in 2019.

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