SK Innovation Co. plans to quadruple domestic capacity to produce batteries for electric vehicle by adding the second facility in Seosan, South Chungchong Province.

The battery arm of SK Group said in a conference on Friday that it was building a new plant to bolster annual output capacity to 3gigawatt by 2018. It will be able to announce a merger and acquisition deal within the next couple of months.

SK Innovation shares closed Friday at 155,500 won ($135.93), up 500 won or 0.32 percent from the previous session.

SK Innovation said its capacity cannot meet current and future demands. The company which has seven-year backlogs increased the first plant’s capacity to 1GWh (equivalent to cover batteries for 40,000 EVs a year) from last year. The first plant has three lines to produce batteries for Korean and Chinese markets. Its new plant will have two lines, and products from this plant will be supplied to Mercedes Benz under 8 million-MWh contract signed early this year. SK Innovation announced it signed the contract in February to provide lithium ion batteries to Mercedes Benz EVs to be launched next year.

Analysts believe that the M&A deal referred by SK Innovation would be related to SK Global Chemical Co.’s acquisition of Shanghai SECCO Petrochemical Company from British Petroleum (BP). Shanghai SECCO, the joint venture between BP and China’s Sinopec Group, runs a naphtha cracking center to produce 900,000 tons of ethylene a year. BP owns a 50 percent in Shanghai SECCO, while the remaining stake is owned by Sinopec (30 percent) and Shanghai Petrochemical Company (20 percent). SK Global Chemical has been seeking to buy BP’s stake in the joint venture. Investment bankers estimate the BP stake will be valued at some 2 trillion won ($1.75 billion). SK Innovation has been cooperating with Sinopec in many areas including the establishment of a petrochemical company in China.

By Chung Wook

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