Chinese battery chemical supplier GEM announced on October 10 that it has signed a new MOU with South Korean cathode material supplier ECOPRO BM. According to the MOU, GEM will provide a total of at least 650,000 tons of high-nickel ternary precursor materials to ECOPRO BM between 2024 and 2026. These materials will be used to manufacture the cathode materials for the NCA and NCM batteries used in electric vehicles. Earlier in April, GEM and ECOPRO BM signed an MOU for the provisioning of 176,000 tons of high-nickel ternary precursor materials between 2021 and 2023. The rapid succession of the transactions between the two companies indicates that ECOPRO BM wants to secure and further increase its supply of upstream materials. Since the second deal is built on top of the first deal, ECOPRO BM is expected to have a guaranteed supply of precursor materials for the 2021-2023 period as per the terms of the first MOU.

Regarding the second MOU, GEM will deliver 150,000 tons, 250,000 tons, and 250,000 tons in 2024, 2025, and 2026 respectively. Chinese news outlet Yincai Global said that with these two supply deals, GEM will be able to raise its production capacity while lowering the associated risk. Yincai also reported that the pricing scheme for the precursor materials will be based on quotes presented in the London Metal Exchange and Fastmarkets MB.

ECOPRO BM is a leading supplier for high-nickel cathode materials related to batteries that power electric vehicles. Its main clients include major battery manufacturers such as compatriot Samsung SDI. South Korean news outlets reported in September that ECOPRO BM has secured a US$8.5 billion (10 trillion won) contract to supply cathode materials to SKI over a three-year period. At the same time, the two companies have begun talks on forming a joint venture in the US.

GEM said that the latest MOU for 650,000 tons of high-nickel ternary precursor materials is the second major strategic collaboration deal with ECOPRO BM following the earlier MOU for 176,000 tons signed in April. With these deals, GEM has locked in the demand from the mainstream international market for the next six years. At present, NCA, NCM and LFP are the main cathode materials for batteries used in electric vehicles. Battery manufacturers are seeking to increase the share of nickel while reducing that of cobalt for the ternary cathode materials because the former is cheaper than the latter. Furthermore nickel-rich cathode materials can contribute to a higher level of energy density for batteries.