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Japan's Toray to buy battery material plant from LG Chem

Separators are key components of lithium ion batteries.

TOKYO -- Toray Industries will purchase an LG Chem plant that makes separators for lithium-ion batteries for an estimated 3 billion yen ($24.6 million) this year.

     Unit Toray Battery Separator Film will set up a wholly owned subsidiary to manage the plant in Ochang, central South Korea, newly hiring some 100 employees. The output will be shipped mainly to LG Chem.

     Toray sees the purchase as an opportunity to catch up with Asahi Kasei, a market leader in separators. LG Chem, meanwhile, believes that relying on outside production for separators and focusing its own resources on lithium-ion batteries would be a better strategy amid a changing business environment marked by an unstable won.

     The Ochang site will be the third separator plant for Toray, after one in Tochigi Prefecture and another in Gumi, also in central South Korea.

     Toray is spending 10 billion yen to beef up the Gumi plant by spring 2016. The acquisition of the Ochang site and expansion of the Gumi facility will together raise Toray's separator production capacity by 50%.

     LG Chem is a major supplier of automotive lithium-ion batteries, along with Japan's Panasonic. The two alone control about 70% of the global market. Customers include General Motors, Ford Motor and Audi.

     Toray hopes to secure steady separator demand by strengthening its relations with LG Chem. With many Japanese and South Korean manufacturers competing in key business areas including electronic devices, automobiles and steel, this marks a rare deal between the two rival camps.

     Asahi Kasei has a 48% global market share in separators for lithium-ion batteries, according to the Japan Economic Center, after its August acquisition of U.S.-based Polypore raised the figure from 34%. Toray is No. 2 at 22%.

     As sales of hybrids and electric vehicles expand, the market for lithium-ion batteries is seen more than quintupling by 2020 on a capacity basis.

     Sumitomo Chemical will open a new separator plant in South Korea as early as 2017, spending 8 billion yen to 9 billion yen. Ube Industries said Tuesday it will increase its annual production capacity of separators 40% by 2017.


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