(Yicai Global) April 20 -- Huayou Cobalt is slated to become the second Chinese firm to build a cathode material plant in South Korea after GEM to avoid trade barriers caused by the United States' Inflation Reduction Act of 2022.

The cobalt supplier, which already has the right to exploit mineral resources in Africa, has penned an investment memorandum of understanding with Seoul-based battery giant LG Chem and local government departments to construct a joint venture factory in an industrial park in Gunsan, South Korea, the Zhejiang province-based firm said in a statement yesterday, without disclosing the scale of investment or other financial or schedule details.

The plant will produce metal sulfate products and precursor materials that can be used to make cathodes for batteries. Huayou decided to invest in the project to adapt to the changing trends of global industrial policies and to integrate the respective advantages of both parties, it added.

Before this, another Chinese supplier of lithium battery materials, GEM, said in March that it will build a factory worth as much as USD931 million in Gunsan with local partners SK On and Ecopro Materials to mainly reply to demand in Europe and the US as the two large markets are changing their policies to support domestic green energy firms.

Huayou's plan to avert trade risks failed to boost its stock price as the shares [SHA: 603799] slipped 1.6 percent to CNY54.93 (USD8) as of 1.49 p.m.

Editor: Emmi Laine, Xiao Yi