By Roland Murphy for AZBEX
Recent news reports have confirmed LG Energy Solution has placed plans for its cylindrical battery plant in Queen Creek on hold.
Back in March, AZBEX was the first outlet to report plans for the plant, basing the story on a development agreement approved by the Pinal County Board of Supervisors and the Queen Creek Town Council. News outlets around the world were quick to pick up and expand on the story. (AZBEX, March 18th)
Late last month, we were also the first to report the project had been put on hold, based on information received from two contracting firms directly involved with the project. While we were certain of our information, it was a little disconcerting that no other outlets picked up the story or ran coverage of their own. We theorized they were unable to get confirmation from other sources. (AZBEX, June 24th)
Now, however, we can finally report confirmation of the project’s “On Hold” status. News outlet Korea Bizwire published an article on June 29th in which LGES said global inflation and a drop in the South Korean currency – both of which combined to balloon development cost estimates – had caused the company to reevaluate its position.
The article quoted an LGES official as saying, “We are thoroughly reassessing the timing, scale and details of the investment, due to a sharp increase in investment costs stemming from the deteriorating business environment.”
The Korean won recently hit a 13-year low against the U.S. dollar, and cost estimates for the core project have swelled from an original 1.7T won ($1.3B) to approximately 2.5T ($1.92B).
The article said LGES will likely have a decision on the plant’s future in four-to-six months, which matches the timeline given by one of our contractor sources in the June 24th article.
A July 3rd follow-up article in the Queen Creek Tribune cited our original coverage extensively and provided additional details. The Tribune article quoted an emailed statement from Ian Calkins with Copper State Consulting Group – an LGES consultant – that said, “Given the unprecedented economic condition and investment circumstances in the US, LG Energy Solution is currently reviewing various investment options, but no decision has been made.”
The article also included comments from the Town of Queen Creek and Pinal County that preparations for the project, including a July 12th hearing for the plant’s air quality permit, are continuing.
We emailed Queen Creek and Pinal County representatives to confirm they are proceeding as planned and also to ask if any contingency plans were in development in the event of LGES’ withdrawal. Queen Creek Communications & Marketing Manager Constance Halonen-Wilson emailed the following reply:
“The Town and the County are aware that LG Energy Solution is re-evaluating. Construction delays and project timeline changes based on inflation and economic conditions are not uncommon, particularly for this scale of project. The Town and the County will continue to work on this exciting project and on this advanced manufacturing corridor as it grows and attracts more interest from companies domestically, and globally.
“LGES has not withdrawn their application for an Air Quality permit, so the Public Hearing and overall Air Quality permitting process continues to proceed. There are no other necessary approvals required by either the County or Town at this time.”
