LG Energy Solution may replace SK On in Turkey battery venture

LG Energy Solution, a battery maker, may build a manufacturing plant in Turkey with Ford, according to a Bloomberg report Monday.

The U.S. carmaker initially signed a memorandum of understanding (MOU) with SK On for the project last year, but the previous deal appears to have fallen through. Local media reports cited the unfavorable market conditions.

A spokesperson for LG Energy Solution said that the company is currently in discussions with Ford regarding possible cooperation, but added “nothing has been decided yet.”

In March last year, SK On signed an MOU with Ford and Istanbul-based Koc Holding to establish a joint venture for electric vehicle (EV) battery manufacturing plant in Turkey.

The initial plan was to build a lithium-ion battery production plant in Ankara, a city southeast of Istanbul and the capital of the country, with an annual capacity of 30 to 45 gigawatt-hours.

SK On has been considering pulling back from the project as market conditions worsen, according to local media reports on Monday.

“We have been discussing the joint venture in Turkey since the signing of the MOU in March last year, but the discussions have not reached a conclusion yet,” said an SK On spokesperson.

“Whether the negotiation would be halted is yet to be decided.”

SK On recently announced that it will raise 2.8 trillion won ($2.25 billion) through a rights offering, 2 trillion won of which will be provided by SK Innovation. SK On initially hoped to raise 3 to 4 trillion won in a pre-initial public offering funding round, but failed to meet the target due to global market contraction.

The battery maker will continue to work with Ford in other ongoing joint projects.

SK On is building EV battery manufacturing plants in Kentucky and Tennessee with Ford through the BlueOval SK joint venture.

LG Energy Solution and Ford may sign an MOU for the project in a few weeks, said Bloomberg in its Monday report, citing unnamed industry sources.

Details for the Turkish project are likely to remain similar to the initial plan with SK On.

LG Energy Solution recently issued preliminary fourth quarter results.

The battery maker’s operating profit for the fourth quarter stood at 237.4 billion won, up 213 percent on year, missing the market consensus. But its annual operating profit is estimated at a record 1.2 trillion won, up 57.9 percent on year.

On Tuesday, Kospi-listed LG Energy Solution’s share price rose 2.05 percent to 473,500 won.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]