(Yicai) Sept. 9 -- China's Huayou Cobalt plans to sell part of its stake in its South Korean lithium battery cathode material joint venture to Japanese automaker Toyota Motor for USD121 million to meet the latest regulatory requirements of the United States and European Union.

Huayou intends to transfer a 25 percent stake in LG-Huayou Cobalt Battery Core Material to Toyota's subsidiary Toyota Tsusho for USD121 million, which would generate an investment return of nearly CNY472.6 million (USD66.2 million), the Zhejiang province-based lithium battery material supplier announced yesterday.

Once the sale is completed, Huayou's stake in LG-HY BCM will shrink to 24 percent from 49 percent, making the Chinese company the JV's third-largest shareholder after South Korea's LG Chem with 51 percent and Toyota Tsusho with 25 percent.

The move aims to meet the regulatory requirements of the US One Big Beautiful Bill Act for battery materials entering the US market and the restrictive conditions imposed by the EU Critical Raw Materials Act on imported key battery raw materials, Huayou noted.

Moreover, the introduction of a strategic shareholder will also optimize the equity structure of LG-HY BCM and enhance the competitiveness of its products in the US cathode material market, Huayou added.

Huayou's subsidiary Tianjin B&M Science and Technology spent KRW5.1 billion (USD3.7 million) to buy a 49 percent stake in LG Battery Core Material, according to an agreement signed by the pair in May 2022.

The JV, which was later renamed LG-HY BCM, announced back then it would invest KRW43.7 billion (USD31.5 million) to build a factory in South Korea with an annual capacity of 66,000 tons of ternary cathode materials for lithium-ion batteries. The first phase, with an annual capacity of 30,000 tons, came on stream early last year.

Huayou's shares [SHA: 603799] were trading down 1.4 percent at CNY52.48 (USD7.37) as of lunch break in Shanghai today, after earlier gaining as much as 1.3 percent.

Editor: Futura Costaglione