Exxon to Build $325 Million Battery-Part Plant in South Korea

By Shinhye Kang

Oct. 9 (Bloomberg) -- Exxon Mobil Corp., the world's largest oil company, will invest $325 million to build a factory in South Korea to produce a main part of lithium batteries used in power-hybrid cars.

TonenGeneral Sekiyu K.K., a unit of Exxon Mobil, began construction of the factory in Gumi city, southeast of Seoul, the Ministry of Knowledge Economy said in an e-mailed statement. The plant will initially start production of ``separator'' film used in the lithium-ion batteries by the end of next year, said Cho Young Tae, director of the ministry. He declined to comment on the production capacity.

South Korean battery makers are rushing into the hybrid battery market as high oil prices and efforts to cut greenhouse- gas emissions boost demand for fuel-efficient cars and trucks. The companies import almost all their lithium-ion battery film needs for mobile phones and laptop computers, mainly from Japan. The country's consumption for the film amounted to 100 billion won ($72 million) in 2006, according to the ministry.

TonenGeneral said in July that the company and two affiliated companies agreed with the South Korean government to build the factory.

The film will be supplied to South Korean hybrid battery makers including LG Chem Ltd., according to the ministry. LG Chem, South Korea's biggest chemical maker, is in talks with a U.S. automaker on a contract to supply hybrid-car batteries and plans to sell to sell 3,000 batteries to Hyundai Motor Co., South Korea's largest automaker, next year.

Japanese companies including TonenGeneral and Asahi Kasei Corp. account for more than 80 percent of the global market of the film.

To contact the reporter on this story: Shinhye Kang in Seoul at skang24@bloomberg.net.