Duration: 2:15
Posted: Mar 28, 2022
LG reviews $1.8b US battery plant over rising costs, fear of softening demand
SEOUL (BLOOMBERG) - LG Energy Solution, the world's second-largest electric car battery maker, is reviewing plans to build a 1.7 trillion won (S$1.8 billion) plant in Arizona as surging material prices inflate the costs of the project.
Given "unprecedented economic conditions and investment circumstances" in the United States, LG Energy is currently evaluating various investment options, the company said in response to a Chosun Ilbo report that it had decided to reconsider the project amid concerns over weakening battery demand
LG Energy had planned to spend 1.7 trillion won to build a plant with 11 gigawatt hours of capacity in Queen Creek, Arizona, to supply cylinder-type batteries for electric vehicle start-ups. Construction was set to start in the second quarter with mass production scheduled for the second half of 2024, LG Energy had announced in March.
A final decision on whether to build the Arizona plant will be made after LG Energy consults with customers on how it can reflect cost increases in battery prices, Yonhap News Agency reported, citing an unidentified source.
The decision is expected to take at least one to two months, according to Yonhap.
The company still plans to proceed with plants jointly owned with General Motors in Tennessee and Michigan, Yonhap said."
VIDEO
Duration: 0:30
Posted: 2 days ago
Duration: 2:10
Duration: 9:44
Posted: Apr 26, 2022
Posted: Apr 25, 2022
LG Energy Solution Gets Cold Feet over Battery Plant in U.S.
A Bloomberg Report
LG Reviews $1.3 Billion Arizona Battery Plant on Rising Costs
An LG Energy Solution Co. battery cell for electric vehicle.
Given “unprecedented economic conditions and investment circumstances” in the US, LG Energy is currently reviewing various investment options, the company said in response to a Chosun Ilbo that it had decided to reconsider the project as construction costs have increased and amid concerns over weakening battery demand."
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> Stock Quote: Source [https://www.bloomberg.com/quote/373220:KS]
373220:KSKorea SELG Energy Solution LtdCOMPANY INFO
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ALL THE FANFARE: “The historic investment from LG Energy Solution is a generational one that will support thousands of good-paying jobs in Pinal County and throughout the state,” Ducey said in the release.
LG Energy Solution is the latest to choose Arizona as a home for high-tech manufacturing, joining companies like Intel, TSMC, Lucid, Nikola and ElectraMeccanica.
“Global technology leaders like LG are choosing Arizona because of our world-class business environment, advanced workforce, unbeatable quality of life and culture of innovation – one that’s delivering unparalleled opportunity for current and future generations,” Ducey said.
Planning & Development» LG Energy Solution Buys Queen Creek Plant Site
The auction of a 650-acre Arizona State Trust Land site, the planned location for the proposed LG Energy Solution battery plant in Queen Creek, went off as expected this week. The international energy and electronics giant was the sole bidder, paying the minimum of $84.44M for the site at the NEC of Ironwood and Germann Roads.
Last month, AZBEX was the first outlet to report on plans for the estimated $2.8B, 1MSF project, which includes development and intergovernmental agreements between LG Energy Solutions Ltd., Pinal County and the Town of Queen Creek. (AZBEX; March 18th). The project has since been covered extensively in regional and global media and was confirmed by LGES March 23rd. The initial investment is targeted at $1.4B, according to sources released since the development agreements were made public.
On April 19th, the Arizona Commerce Authority issued a celebratory press release on the project. Officials including Governor Doug Ducey, ACA President and CEO Sandra Watson, Greater Phoenix Economic Council President and CEO Chris Camacho, Pinal County Board of Supervisors Chairman Jeffrey McClure, and Queen Creek Mayor Gail Barney all expressed their pleasure and support for the project and its impacts on area economic development efforts.
Commercial Real Estate
Behind the deal: Why battery giant LG selected Queen Creek for its new plant
By Audrey Jensen Reporter, Phoenix Business Journal
"South Korea-based battery giant LG Energy Solution Ltd. is moving forward with its $1.4 billion manufacturing plant in the Phoenix metro after it spent months looking for a site to support the increasing demand for lithium-ion batteries in the U.S.
LG Energy Solution, or LGES, recently purchased about 650 acres of state land in Queen Creek for a 1 million-square-foot cylindrical-type battery manufacturing plant. The facility is expected to generate about 2,800 jobs and start production by 2024 at Ironwood and Pecos roads. LGES is one of the largest battery producers in the world.
-- An economic impact analysis completed in May by Tempe-based Rounds Consulting Group Inc. said the facility will be constructed in multiple phases and cost nearly $3 billion to construct as well as buy and install the necessary manufacturing equipment. Town documents said the initial facility will comprise 11 buildings totaling 1.5 million square feet of manufacturing, office and facility support space on about 120 acres, according to documents submitted to the town
-- Plans for the facility have drawn the ire of local residents who are concerned about the long-term environmental and safety impacts the plant could have on nearby residential communities and schools
-- LGES chose Queen Creek, according to the company, because of its “strategic importance, business-friendly environment, and access to educated and an abundance of workforce,” which are important site selection factors for the electric vehicle supply chain.
Queen Creek, one of fastest-growing municipalities
The town of Queen Creek is one of several fast-growing municipalities in the metro that has seen a significant increase in population, housing and commercial development in recent years and is projected to continue expanding.
The town, which grew to 66,300 residents last year, is expected to reach nearly 75,000 people by 2023. Just southeast of the town, the adjacent San Tan Valley also has more than 100,000 residents that support Queen Creek.
-- The LGES site also sits close to the Phoenix-Mesa Gateway Airport, a big economic driver in the region, Union Pacific rail line, and State Route 24, which connects Queen Creek and Pinal County to the Loop 202 in southeast Mesa, one of the hottest industrial markets in the country.
Optimistic projections and deals:
In May, the company received approval for its site plans from the town’s planning commission.
The facility will not require any further approvals or public hearings, according to the town of Queen Creek, which said it will be investing $47 million in infrastructure to support the LGES plant and the region with road improvements and water and wastewater infrastructure.
The May 2022 economic impact analysis said construction of the facility will also support an estimated 13,600 jobs, generate $64 million in state tax revenue, $16 million in Pinal County tax revenue and $27.8 million in Queen Creek tax revenue.
During the next decade, the report said Arizona will collect $93.1 million, Pinal County will collect $36 million and Queen Creek will collect $27.4 million in tax revenue from operations of the facility.
The Arizona Commerce Authority said the company is eligible for a maximum of $71.26 million in state incentives, including $66 million from the Qualified Facility program and $5 million from the Arizona Competes Fund, which are both performance-based.
The town of Queen Creek approved a Foreign Trade Zone recommendation for the site in March, which significantly reduces property taxes, and deferring all building and permitting fees and waiving the fees if 2,800 jobs are created. Pinal County will also reimburse LGES training costs of $3,000 per Pinal County resident employed and $1,500 per non-Pinal County resident employed.
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