SK Materials to form a JV with US battery startup Group14 Technologies

SK Materials Co., SK Group’s industrial gas manufacturing arm, will set up a joint venture (JV) with a US battery materials startup Group14 Technologies to make inroads into the market amid the fast-growing electric vehicles (EVs).

SK Materials, which agreed with Group14 to form the JV in South Korea, is preparing to sign a deal, according to the battery industry on July 19. SK Materials will hold a 75% stake in the JV with a 70 billion won ($60.9 million) investment, while the Group14 takes the remaining shares. SK Materials is set to mass-produce silicon anode at home through the JV.

Group14, found in 2015, is specialized in anode materials, one of four core materials for secondary batteries along with cathode materials, separators and electrolytes. Its silicon-carbon composite material called SCC55 can increase energy density up to 50% and battery capacity by nearly five times compared to batteries using graphite anode materials, according to the industry. Charging speed is also much faster.

The global silicon anode market will surge to 5.5 trillion won by 2025 from 13.3 billion won this year, HI Investment & Securities forecast. But the industry has a clear barrier to entry as only two or three companies in the globe such as South Korea’s Daejoo Electronic Materials Co. have technologies for mass production of silicon anode.

INVESTORS HAIL

After the news of the JV, SK Materials’ shares ended up 4.4% at 380,000 won, far outperforming a 0.2% dip in the wider Kosdaq, as analysts projected rosy outlook.

“It is possible to further expand battery materials business in the future, so the price-to-earnings ratio (PER) will increase,” Hana Financial Investment analyst Kim Kyung-min said.

SK Materials last year invested 14 billion won in Group14 and became the third-largest shareholder with a 10.3% stake.

Once the joint venture in South Korea starts mass production of anode materials, it will threaten Daejoo Electronic for local market shares as SK Materials may be responsible for suppling the materials to SK Innovation’s battery business. The industry is also predicting that SK Group may consider buying Group14’s management rights depending on the JV’s performance.

Group14, whose shareholders also include German BASF, Japanese Showa Denko and Chinese battery maker Amperex Technology Limited (ATL), in April announced the launch of its first commercial-scale 27,000-square foot US manufacturing factory to meet demand for higher-performing lithium-silicon anode materials.

Write to Jun-ho Cha at chacha@hankyung.com
Jongwoo Cheon edited this article.