LG Chem vows to up investment in R&D to $897mn this year

Date:05-11-2017

South Korea’s leading chemical and battery making company LG Chem Ltd. will invest 1 trillion won ($897 million) in research and development this year and increase the R&D investment by 10 percent every year, said Park Jin-soo, LG Chem’s Vice Chairman last Friday.

The company will invest such an unprecedented large amount on R&D as a Korean chemical firm, also the highest R&D investment for LG Chem that spent 780 billion won last year, to develop novel technologies that can help it fend off growing challenges in the electronic vehicle battery industry and nurture new growth engines.

“We will spend more than 4 percent of our sales on R&D this year, higher than that of global chemical firms,” Park told reporters last Friday at the company’s research center in Daejeon. The world’s leading chemical companies BASF SE and The Dow Chemical Co. spent 3.8 percent and 3.3 percent, respectively, on R&D against their sales in 2015. With an aim to make LG Chem an “R&D Mecca” that develops game-changing technologies, the company will increase the R&D investment to 1.4 trillion won and the number of research staff from current 5,300 to 6,300 by 2020, he added.

The company also aims to raise sales generated from new businesses such as energy, water, bio and new material development “from 8.5 trillion won this year to 16.3 trillion won by 2020,” Park said. While allocating 30 percent of this year’s R&D budget in its core electric vehicle battery business, it will spend 10 percent to 20 percent each to the rest businesses like basic materials, information and electronics and life science, according to him.

Park said the operating rate of its EV battery making facility in Nanjing, China, has been upped to around 70 percent, but the company is currently manufacturing products to be exported overseas and energy storage systems (ESS). In order to prepare for the Chinese government’s plan to phase out EV subsidies starting 2020, he said the company strives to develop technologies that no companies around the world can match.




It is getting tough for Korean EV battery makers to produce and sell their battery packs for electric vehicles in China due to reduced orders from China’s shunning of Korean batteries in existing and new EVs eligible for the government subsidies. None of the Korean battery makers including LG Chem and Samsung SDI that even have stand-alone factories in China were able to get on the fourth vendor list by the country’s Ministry of Industry and Information Technology eligible for EV subsidies.

LG Chem also plans to make heavy investments in its bio and agricultural business through its pesticides and fertilizer making subsidiary Farm Hannong. “Our green bio business currently ranks 33rd in the world, but we aim to make it in the top ten within a decade and top six over the next 20 to 25 years,” he pledged.