Kentucky Gov. Andy Beshear announced the latest electric-vehicle-related investment in Kentucky, as LOTTE Aluminium Materials USA LLC will locate an aluminum foil manufacturing operation in Hardin County with a $238.7 million investment that will create 122 full-time jobs.
“I want to welcome LOTTE to Kentucky as we continue to see significant investment from EV-related businesses across the state,” Gov. Beshear said. “Further growth of this sector will require attraction of a broad range of suppliers, and this announcement by LOTTE signifies just that. We are building an ecosystem that will last for generations to come, and I am happy to announce this company will be a very important part of that vision.”
LOTTE Chemical has announced a joint venture with LOTTE Aluminium to build a manufacturing facility in Elizabethtown to produce 36,000 tons of cathode foil, a type of ultra-thin aluminum foil that is a core material used in EV batteries. Cathode foil is one of the four major components of lithium-ion batteries. It supports the cathode active material that determines the capacity and voltage of the secondary battery, and at the same time serves as a passage for electrons.
Company leaders anticipate demand for the material to increase by an average of 32% annually by 2030. The Hardin County operation located on 40 acres in the T.J. Patterson Industrial Park will be the company’s first aluminum foil facility located in the United States and is expected to begin operation in 2025.
The project also represents continued success of Kentucky’s pilot Product Development Initiative (PDI), as the site that will be home to LOTTE was approved for $500,000 in state funding in 2020 to support infrastructure improvements.
“We will do our best to develop and support technology so that we can stably produce high-quality and high-efficiency cathode foils to respond to customers one step at a time,” said Kim Gyo Hyun, president and CEO of LOTTE Chemical.
LOTTE Aluminium and LOTTE Chemical are subsidiaries of LOTTE Group, one of the largest conglomerates in South Korea, with over 90 business units employing more than 80,000 people. LOTTE Group was founded in 1967 and serves a broad range of industries, including hospitality, financial services, food manufacturing, entertainment, industrial chemicals and aluminum manufacturing, among others.
LOTTE Chemical, established in 1976, produces basic chemicals and advanced materials, including polymers, monomers, basic petrochemicals, construction and interior materials and water treatment membrane. Founded in 1966, LOTTE Aluminium manufactures aluminum foil, printed packaging materials and corrugated cardboard boxes, among other products.
Kentucky is positioned as a national leader in the rapidly growing EV market, with significant investment across the past two years. Since June 2020, the commonwealth has seen over $8.5 billion in EV-related investments, with well over 8,000 full-time jobs announced.
In the past year, the Beshear administration announced the two largest economic development projects in state history. In September 2021, Gov. Beshear and leaders from Ford Motor Co. and SK Innovation celebrated the transformative $5.8 billion BlueOvalSK investment that will create 5,000 jobs in Hardin County. And in April of this year, the Governor was joined by leadership at Envision AESC to announce a $2 billion investment that will create 2,000 jobs in Warren County. These announcements solidify Kentucky as the EV battery production capital of the United States.
Hardin County Judge/Executive Harry Berry said the project adds to recent growth in Central Kentucky.
“Hardin County is on the fast track for unprecedented growth in coming years and this announcement reinforces that notion,” said Judge Berry. “Our local leaders, both in government and in organizations such as the Elizabethtown-Hardin County Industrial Foundation, have been and will continue to be steadfast in ensuring new manufacturers have the support needed to build and develop in our community.”
Elizabethtown Mayor Jeff Gregory said the arrival of LOTTE to the area will benefit the entire region.
“Through industrial revenue bonds issued by the city, we strive to incentivize industrial development here in Elizabethtown,” said Mayor Gregory. “The arrival of LOTTE Aluminium Materials USA will be a win for Elizabethtown’s workforce and the workforce of the surrounding region, and by extension, a win for the community.”
Matt Hess, board chair for the Elizabethtown-Hardin County Industrial Foundation noted the project builds on the rapidly growing EV presence in the commonwealth.
“Amid recent large-scale industrial development announcements in the Elizabethtown-Hardin County area over the last year, there have been plenty of discussions regarding ancillary projects coming to the region,” Hess said. “This announcement proves there is a lot of truth to the assertion that our industrial sector will only grow in the coming years. We’ve already seen growth in the past year with the construction of Kruger Packaging and expansions among existing manufacturers in the industrial park, and the arrival of Lotte Aluminium Materials USA signals even stronger growth.”
Greg Lee, president and CEO of Nolin RECC, spoke on the continued growth of Kentucky’s EV sector.
“The future of Kentucky is changing dramatically through the electric vehicles industry. This investment by LOTTE Aluminium is a testament to that movement,” Lee said. “We are excited to welcome LOTTE Aluminium into our Nolin RECC and Kentucky’s Touchstone Energy Cooperative family, and we look forward to helping them find success here in Hardin County.”
LOTTE’s investment and planned job creation furthers recent economic momentum in the commonwealth, as the state builds back stronger from the effects of the pandemic.
In 2021, the commonwealth shattered every economic development record in the books. Private-sector new-location and expansion announcements included a record $11.2 billion in total planned investment and commitments to create a record 18,000-plus full-time jobs across the coming years. Kentucky’s average incentivized hourly wage for projects statewide in 2021 was $24 before benefits, a 9.4% increase over the previous year.
The economic momentum has carried strongly into 2022, with both S&P Global Ratings and Fitch Ratings upgrading Kentucky’s financial outlook to positive in recognition of the commonwealth’s surging economy.
And Site Selection magazine placed Kentucky at 6th in its annual Prosperity Cup rankings for 2022, which recognizes state-level economic success based on capital investments.
Kentucky has posted new record low unemployment rates for three consecutive months, falling from 3.9% in April to 3.8% in May and 3.7% in June.
In July, the Governor reported the highest annual growth rate in 31 years. And for the second year in a row, Kentucky’s General Fund budget surplus has exceeded $1 billion. Also in July, Gov. Beshear reported that the state’s Rainy Day fund is up to a record balance of $2.7 billion, significantly higher than the $129 million balance the fund had when the Governor took office.
To encourage investment and job growth in the community, the Kentucky Economic Development Finance Authority (KEDFA) in May preliminarily approved a 10-year incentive agreement with the company under the Kentucky Business Investment program. The performance-based agreement can provide up to $3.3 million in tax incentives based on the company’s investment of $238.7 million and annual targets of:
Creation and maintenance of 122 Kentucky-resident, full-time jobs across 10 years; and
Paying an average hourly wage of $23.35 including benefits across those jobs.
Additionally, KEDFA approved LOTTE for up to $1 million in tax incentives through the Kentucky Enterprise Initiative Act (KEIA). KEIA allows approved companies to recoup Kentucky sales and use tax on construction costs, building fixtures, equipment used in research and development and electronic processing.
By meeting its annual targets over the agreement term, the company can be eligible to keep a portion of the new tax revenue it generates. The company may claim eligible incentives against its income tax liability and/or wage assessments.
In addition, LOTTE can receive resources from Kentucky’s workforce service providers. Those include no-cost recruitment and job placement services, reduced-cost customized training and job-training incentives.