Towards a top global science company. Good afternoon, we will now start LG Chem 2022 Investor Day. I am the emcee of today's event, Hyun-suk Yoon, Head of IR at LG Chem. This event was originally to be held both online and offline, but as the COVID situation has been worsening, we unfortunately had to switch to online only. We have a lot of interesting presentations today, so please stay with us to the end, and also participate in the Q&A later. Before starting, let me make a few announcements. The format of today's event is not our usual conference call, but we have a video live stream as well. In addition, the whole event will have Korean-English simultaneous interpretation, including the Q&A.
Today's presentation will be shared with our investors and shareholders overseas, so for the convenience of our non-Korean-speaking audience, all slides presented today will be in English. We ask for your understanding. The Korean and English presentations on the performance are available on our website. Lastly, for those of you who are participating via webcasting, if you have any questions for the Q&A session, please submit your questions through the question box at the bottom of the page. For those of you who are participating via Zoom, please stay on mute until you are given the chance to ask a question. Let me walk you through the agenda today. We will start with a presentation on the fourth quarter full year 2021 performance and 2022 business outlook, which will be given by the CFO, Dong Seok Cha.
Following, the main presentation will be given by the CEO, Shin Hak-cheol, who will present you with the company's mid to long-term growth strategy. At the end of all the presentations, we will have a Q&A session. Now, let us start with the first presentation, which is the performance and outlook. Let me ask the CFO, Cha Dong-seok, to come to the stage.
Good afternoon. I am Cha Dong-seok, CFO of LG Chem. I would like to extend my greetings to the shareholders, investors, and analysts who are online. Let me go right into the fourth quarter and full year 2021 performance, and also the outlook for 2022. First, let me go over the fourth quarter 2021 performance. In the fourth quarter, sales totaled KRW 10,949 billion, an increase of 23% year-over-year, and 3% quarter-over-quarter.
Even though major production lines such as Daesan and NCC had turnarounds, we were still able to continue growth on the top line. Fourth quarter operating profit was KRW 748 billion, and our operating margin was 6.8%. For the company as a whole, our performance was similar to the previous quarter but driven by moderating demand in petrochemicals and automobile chip shortage issues, petrochemical and advanced material experienced a slight weakening versus the previous quarter. For the full year of 2021, it was a year of significant growth. Full year sales grew 42% year-over-year to KRW 42.7 trillion, setting a new record in the company's history.
On top of high growth of the EV batteries, the petrochemical business, also due to new capacity and price increases driven by strong demand, was able to grow 45%, which was another record. The advanced materials business also increased significantly because of the cathode capacity additions and the separator business acquisition. Life sciences also grew due to new production launches like Ufolio and Humira biosimilar, achieving a 15% top line growth. In 2021, if we look at the full year operating profits, it also represented a historic high of KRW 5 trillion. During the past year, global distribution bottlenecks and automobile chip shortages created significant challenges in the business environment. At the same time, rising material costs and battery recalls, which were profitability-related issues, also had an impact on our profits.
Nevertheless, the company was still able to leverage its differentiated portfolio and product competitiveness to increase operating profit in all business areas, which led to a record high operating profit. Now let me move on to the 2022 business outlook and our CapEx plans. The business environment in 2022 is expected to be challenging due to factors which include a global inflation and monetary tightening. The company believes it will be able to maintain its growth momentum. This year, LG Chem sales, excluding LGES, is targeting 4% YOY to KRW 27 trillion. In the petrochemical business, overheated demand is expected to cool down, and global capacity additions may lead to a less favorable market. The company will continue to focus on premium products to maintain our top line and also profits.
In advanced materials, due to the automobile chip shortage and metal price increase, we do expect difficulties to continue, but the company will continue to grow by expanding its cathode and separator business. In life sciences, Humira biosimilar in Japan and aesthetic business expansion in China will also contribute to our overall growth. Next is the 2022 CapEx plan. 2022 total CapEx, excluding LG Energy Solution, is expected to go up by approximately KRW 1 trillion to KRW 4.1 trillion. During the past few years, we have focused on battery investments, which ultimately led to relatively less investments for other businesses. However, from last year and going into this year, the company is planning to focus its investment capacity in the three new growth drivers to create a solid foundation for sustainable growth.
With this, I would like to conclude my presentation on the 2021 performance and 2022 outlook. Thank you.
Let me now introduce the CEO of LG Chem, Mr. Shin Hak-cheol.
Good afternoon. I am the CEO of LG Chem, Shin Hak-cheol. It is an honor to have this opportunity to meet the shareholders and investors of our company. Today, I would like to explain LG Chem's overall sustainable growth strategy over the mid to long term, and also our execution plan. As you have just seen in the video, LG Chem, to this day, has constantly grown as a company. We have been able to grow even amid the Asian financial crisis and the global financial crisis. We do have that potential. Looking at the past two decades alone, in terms of the top line, we have grown over 10 times. Last year, as the CFO has mentioned, we have been able to record a new record high performance level.
In addition, whatever the business environment, with our own unique approach to make sure that we continue to grow, we have been able to take a long-term view on the industry and also diversify our business portfolio. In 2010, the petrochemical business was 70% of our sales. However, including the battery business and also for advanced materials and bio, through relentless efforts to diversify our portfolio, right now, the petrochemical business today accounts for less than half, with other businesses contributing much more. For any businesses that showed stagnant growth or low profits from a portfolio level, we have exited these businesses and we have focused it aggressively in terms of our investments in new growth areas. The current business environment represents an age of significant transformation.
The climate change crisis has taken center stage, and carbon reduction has become a key agenda for humanity. At the same time, digital transformation and the post-pandemic environment after COVID also represent change. These are all changes that could impact the growth of a company and also whether it survives. There is continuous change that is taking place. In this environment, the behaviors and order of the past will no longer be valid. In addition, the success of the past will not guarantee the success of the future. I expect that in each of the industries that there will be a significant reset taking place. This transformation, which will change the world as we know, will be a crisis to some, but to others it can be an opportunity to navigate into new blue oceans and also to have growth opportunities.
For example, if we look at the automotive industry, which is showing significant change, companies that have taken the most active stances in addressing climate change and digital transformation have recently seen their market cap surge. This is even if they have less sales volume or significantly lower revenue than others, the market will place very high value on these companies and recognize that value. In the chemical industry, also, this company that is able to adapt quickly will ultimately survive and grow. For many years, LG Chem has been expanding outside of the chemical business into new businesses like batteries and battery materials. As a result, this has contributed to enhance our overall market value. Among the global chemical companies, we enjoy a relatively higher corporate value.
As of the current time, we are second after the top chemical company. By actively embracing the changes that are taking place, we do believe we will be able to further enhance our overall value. LG Chem will continuously and actively respond to changes taking place and enhance its competitiveness with the goal of becoming not only a chemical company, but a sustainable top global science company. To this end, the vision that we have as a company will be to connect science of life for a better future. We will connect science to life for a better future. As a top global science company, we have two very important strategic directions which I would like to share with you.
The first is a sustainable growth strategy for this age of transformation, and the second is LG Chem's roadmap to achieve carbon neutrality to address climate change. First, let me explain our sustainable growth strategy. During the press conference that I had last July, I presented LG Chem's three new growth drivers, which were namely the sustainability business focused on eco-friendly material, the e-mobility business focused on battery material, and the innovative new pharmaceutical drugs. Today, I would like to use this opportunity to present a more detailed blueprint for growth and also introduce the progress that we have had to date. First, let me start with the sustainability business, which focuses on eco-friendly material. In the petrochemical business, to decrease carbon emissions and also create a circular economy with eco-friendly products, we will be focusing on three areas.
We are preparing one by one in these areas. The first is our recycled products. The second would be our bio and biodegradable materials. The third is our low carbon energy transition-related business and material businesses. First is the recyclable plastics business. As waste plastic is becoming an ever-important environment and social issue, global demand for recycled plastic driven by IT or tech companies is increasing significantly. LG Chem is already using plastic derived from used home appliances as raw material, and we are selling recycled ABS and engineering plastic products. As demand for these products grow, shipments have been growing significantly.
Securing the waste plastic is key to expand this business, so we are currently partnering with not only home appliance manufacturers like LG Electronics, but also other companies, including Coupang, which is the largest e-commerce platform in Korea. The true breakthrough in recycled plastic will be chemical recycling. As announced recently, the company is planning to construct a 20,000-ton pyrolysis oil plant with the target of opening in 2024. With this as the beginning, the company will lead the chemical recycling industry. Bio and biodegradable plastic are based on bio feedstock and can decompose in a relatively short period of time to go back to nature. Carbon emissions during the feedstock sourcing and production process can be reduced dramatically, and waste plastic issues can also be addressed at the same time.
Due to this green nature, we expect demand in this area to grow 20% per year in the future. We do believe it has huge potential. One example is PLA, which uses sugarcane and corn as feedstock to produce plastic. After being used, PLA is naturally degradable. Through our JV with ADM in the U.S., LG Chem is planning to build a 75,000-ton PLA plant in the U.S. in 2025, and have commercial operations thereafter. Another form of biodegradable plastics is PBAT. We are currently building a 50,000-ton plant with the target of commercial operations in 2024 in Daesan. Through steady production development and capacity expansions, we will lead the high growth biodegradable plastic market. For these recycled products, biodegradable products, and plant-based products and other eco-friendly products all together, the company is going to use an overall comprehensive brand, LETZero.
This is a new brand that we have recently launched. This will not only strengthen LG Chem's brand awareness as an eco-friendly company, but can also be used for consumer and user goods, which we believe will help promote more eco-friendly consumption. By creating better products, we will focus on our efforts on making the LETZero brand into a more popular brand. Finally, renewable energy material that can be used in the energy transition is also expected to be a high growth area. In particular, POE used for photovoltaic encapsulants are recognized to be durable and insulating. For this product, we forecast growth to be 30% per annum in the global market going forward. Thus, we are currently expanding our photovoltaic encapsulant dedicated POE capacity by 100,000 tons, and it is expected to run from 2023.
Added to the current 280,000 tons, the total 380,000 tons in the end will make us the second-largest capacity in the world. By developing new properties, we will maintain our market leadership in this area, while also exploring new opportunities in other renewable energy material areas. Based on these efforts, the sales of the sustainability business is expected to grow from KRW 1 trillion last year to around approximately KRW 3 trillion in 2026, and accelerate and grow rapidly to approximately KRW 8 trillion in 2030. In particular, innovative business areas, including the recycled material and biodegradable and bioplastics, are expected to go from KRW 90 billion in 2021 to more than 50 times in the next nine years. Now let me move on to the second growth driver, which is also showing the highest growth, battery materials.
LG Chem will become the top battery material producer in the world by expanding its presence in cathodes, separators, and other battery materials. We do want to solidify our overall position. We have a long history of developing cathode technology and also producing products. In particular, in 2006, we were the first company in the world to mass produce a nickel cobalt manganese, or NCM cathode. We want to aggressively expand this business with our differentiated competitiveness, i.e., our long track record of outstanding technology, world-class level unit productivity, and metal sourcing capabilities based on cooperation with a wide variety of partners. A few weeks ago, we started construction on our Gumi factory, which will be the largest cathode production facility in the world.
We are planning to increase our capacity to 260,000 tons by 2026, which includes expansion plans in Europe. For high nickel cathodes, which have a nickel content of more than 80%, we are planning to increase full commercial production for our cylindrical and pouch type products this year and increase this portion to 90% by 2026. Moreover, leveraging our competitiveness, we are also actively planning to expand our customer base outside of LG Energy Solution. This year, we do believe that we will have a meaningful non-LGES business start. The separator business is a new business area that uses our proprietary SRS technology.
To create a foundation, we acquired the coating business from LG Electronics in the second half of last year, and we are currently pursuing a JV in Hungary with Toray, one of the best separator companies in the world. We are planning to strengthen the competitiveness of this business as the Hungary JV starts commercial production this year. Based on this competitiveness, we are planning to expand capacity in Europe and also create capacity in the U.S. to build out our global sites and also diversify our overall client base. Other than cathodes and separators, we will further expand the ancillary battery material business, which includes important ancillary materials such as CNT, thermal adhesive, anode binder, battery assembly solution, BAS. We will, in these areas, continue to grow the business to be more than three times in 2026.
In carbon nanotube, CNT, we plan to expand market share by growing the current 17,000-ton capacity by more than 5 times by 2026. To identify new battery material business, we are actively pursuing R&D and external opportunities. Notably, there is an ongoing R&D in pure silicon technology to improve anodes performance. We are reviewing various external opportunities to strengthen the battery material business' competitiveness. We plan to expand the sales of the battery material business by more than 12 times within 9 years and continue to grow the business to achieve double-digit OP margin. With LG Energy Solution adding more capacity and sales with external customers currently under discussion, to materialize and business expansion for the new battery material business, when it becomes more concrete, then the planned sales target would likely have more upside opportunities.
The company's third growth driver is new drug development. In life science, LG Chem aims to become a global pharmaceutical company with innovative new drugs. Cancer treatment, where there's a strong growth potential due to unmet demands, and diabetes and metabolism, where we have deep R&D experience, we aim to secure leadership in these two categories. For this end, on top of the existing synthetics as well as bio drugs, life science business is stepping up efforts to develop the technology of the future, which is the cell treatment technology, which has the potential to fundamentally treat illnesses. When looking at the pipeline for global innovative new drugs that have gone beyond clinical phase I, through continued R&D investments, we have grown the number to 10.
By continued acceleration in the R&D area, we aim to increase this number to 23 in 2030, and we have a goal to commercialize at least two innovative drugs in the advanced markets such as U.S. and Europe. We aim to leap forward as a global pharmaceutical company by continued new drug launches through reinforced pipeline in the future. This year, we anticipate great progress in our pipeline. The new gout treatment, which successfully completed clinical phase II in the U.S. last year, plans to enter the multinational clinical phase III, including in the U.S. and China this year. Also in the U.S., the treatment for non-alcoholic steatohepatitis, NASH, which is in clinical phase I, and the world's first oral rare obesity treatment, MC4R agonist, will successfully complete clinical phase I, and we expect that they will move to the next stage.
Since announcing the top three new growth drivers in July, we've already achieved much progress and many results in the past six months, and we are meticulously executing our plans to realize full-fledged growth in these areas. According to the business plan for the three new growth drivers, sales was KRW 3 trillion in 2021, but grow to KRW 12 trillion in 2026 and KRW 30 trillion in 2030. It is expected to grow by 10 times in 9 years with an annual growth rate of 30%. In line with the massive industrial changes, through thorough execution, we'll achieve growth according to our plan.
Backed by the growth of these three new growth drivers, excluding LG Energy Solution, LG Chem's sales revenue for the business will grow to KRW 40 trillion in 2026 and KRW 60 trillion in 2030. To grow the new business to respond to new changes and challenges, we need to develop technologies and products that have not existed before. To realize the above-mentioned strategy, LG Chem will spur the development of innovative technologies and products. LG Chem, with its 75-year history, is a science company that has excellent researchers and many technologies ranging from basic chemicals, materials, to pharmaceuticals. To foster the top three new growth drivers from 2022, we plan to further accelerate R&D investments. In 2022 alone, we plan to hire 500 new R&D personnel and expand R&D investments to KRW 1 trillion, which is an increase of 35% YoY.
Based on the advanced technologies such as AI and DX, more than 60% of our R&D resources will focus on new growth drivers to develop first-ever new technology and products. I'd like to introduce the status of key R&D activities for the new growth drivers. In the sustainability business, many promising technologies are researched and developed by our R&D resources. First, in recycled plastic business, we are working on proprietary development and open innovation to develop chemical recycling technologies. Through active cooperation with third parties, for example, including U.K.'s Mura, we plan to commercialize chemical recycling. In mechanical recycling technology, we have succeeded in developing the technology to secure high purity recycled plastic material, and we're currently verifying commercial feasibility. Starting with the launch of PCR PVC products in 2023, we plan to expand into other plastic materials.
In biodegradable plastic, on top of the PLA and PBAT that we're already working on to commercialize, we succeeded in developing the biomaterial base biodegradable PHA source material that are both flexible and transparent, and we're verifying the scale-up for commercialization. Also, with carbon reduction technologies, the R&D organization is attempting to develop various technologies that capture and use CO2. We're also developing the catalyst that can make plastic using the captured CO2 as feedstock. In battery material, we are focused on developing the next generation material that can dramatically improve not only battery performance, but also safety. We are simultaneously developing innovative processes to strengthen cost competitiveness. In single crystal cathode, we expect safety improve significantly since it can reduce battery cells gas emission by 85% compared to existing products.
Also, we are researching and developing the next generation separator, which is the ceramic separator. By replacing the existing polymer film material with ceramic, which has excellent thermal resistance at high temperature, we expect that it will play a great role in strengthening battery safety. In anode, we are developing the pure silicon anode, and this will significantly improve anode capacity compared to existing anode once we actually do commercialize this. Moreover, we are also developing the all solid-state materials for next generation battery technology. As such, we're not only strengthening the internal R&D capabilities, but through actively searching for opportunities outside, we're rapidly complementing insufficient capabilities and pursuing new growth opportunities. Last year, for inorganic growth, including M&A and strategic investment, we mentioned that we were reviewing more than 30 projects. During the past six months, there were small and big outcomes.
An important accomplishment was investing around KRW 1 trillion to enter the separate business. We built a joint venture with Toray in Hungary, and we acquired the separator coating business from LG Electronics. Also, there was a PLA JV with ADM in the U.S. We will not stop here. We will go one step further to become a global top company for sustainability. For this end, we will more actively review various M&A opportunities. We divested some shares through the LG Energy Solution IPO, which resulted in improved financial structure and has greatly increased our financial capabilities. We believe now that we can pursue an M&A opportunity of a more meaningful scale. Through this, we'll quickly secure necessary capabilities to foster new growth drivers and further diversify LG Chem's business portfolio. Therefore, we believe that we can achieve even greater growth than our planned growth.
Indeed, we will be able to leap forward as a top global science company that can achieve tremendous growth. Up to now, I've talked about LG Chem sustainable growth, and today, I would like to share another commitment for carbon neutral growth. LG Chem in July 2020 was the first Korean chemical company to declare carbon neutral growth. We promise to pursue sustainable growth. In 2050, we will cap the annual carbon emission to 10 billion tons, which is the level in 2019. The carbon reduction of 10 million tons in 2050 is tantamount to CO2 emissions of 4.2 million cars over a year and could only be offset by planting 74 million pine trees. To achieve this challenging goal, we promise that LG Chem, through strong commitment and leadership, will execute our plans and coordinate our efforts with wide-ranging stakeholders.
To directly reduce carbon emission, we will introduce innovative processes and transition to eco-friendly feedstock, expand the use of renewable energy like RE100, which is avoid, and offset inevitable carbon emission, which is compensate. By doing reduce, avoid, and compensate, we are developing detailed action plans in the above mentioned three areas. Moreover, from raw material collection to product manufacturing, and through the life cycle assessment, LCA, to assess the qualitative environmental impact, we can identify the cause and extent of a product's environmental impact in each stage and strategically make improvements. LCA is a necessary task to strictly validate whether our products are low carbon products or not. LG Chem is moving the fastest in Korea to perform the LCA.
We plan to complete the LCA for all products in Korea by the third quarter this year, and for all overseas products by the second quarter next year. This will upgrade our low carbon competitiveness as well, and be a big help in solving pain points in the production of customers' carbon neutral products. To solve the challenging task towards carbon neutrality, global cooperation is a must. As LG Chem CEO, to promote public-private partnership, I was invited as a panelist for the Davos Agenda, which is a pre-event of the Davos Forum, for the first time as a Korean businessman in 2021. I presented on the solutions to the climate crisis. At present, as Korea's first and only representative from Asia, I am a member of the Alliance of CEO Climate Leaders.
Working with leaders from around the world, we're identifying decarbonization measures such as net zero and Scope 3, and promoting the agenda to the international community. Furthermore, LG Chem is coordinating with various stakeholders. As mentioned before, many things are already set in motion, and we want to make a new promise for LG Chem sustainability today. During the past year, LG Chem fiercely contemplated and checked our entire business to pursue both stability and growth. Following the 2050 carbon neutral growth declared two years ago, today, we'd like to raise our goal. LG Chem formally announces its commitment to achieve carbon neutral growth by 2030, 20 years ahead of schedule, and net zero in 2050, keeping carbon emission at zero in 2050. This is our declaration today.
Keeping carbon emission... Carbon emission at zero in 2050 is a massive challenge to reduce additional 10 million tons in addition to the existing 10 million tons reduction plan. Indeed, we'll be at the forefront of the execution through particular technology development and planning. In summary, LG Chem, while pursuing continued growth by fostering the 3 new growth drivers in this transformative era, will achieve the 2050 net zero target to actively respond to climate change. In so doing, LG Chem will emerge as a bona fide top global science company and move forward to a better future. Thank you.
It's now time for the Q&A. We have around 30 minutes to answer your questions, and we will conclude today's event at around 3:10. To give more people to ask questions, we will limit the opportunity to 1-2 questions per person.
For those joining us via webcasting through our homepage, please post your questions in the question window located at the bottom of the screen. For those joining us via Zoom, use the Raise Hand function, and when you're called, please wait until the operator unmutes you. For the Q&A, we have three executives here. We have CEO Shin Hak-cheol, CFO Dong Seok Cha, and we also have CTO as well as Chief Sustainability Officer Yoo Ji-young here representing the company's management team. It's a rare opportunity for us to have a Q&A session with the leaders of LG Chem, so please feel free to ask questions that you have. We have already received requests via Zoom. We'll call you according to the order here.
The first question is from Hyundai Motor Securities. Mr. Dong-j in , please go ahead.
Yes, good afternoon. This is Kang Dong-j in from Hyundai Motor Securities. Thank you for the opportunity to ask questions. I do believe that this is a very meaningful event, talking about the long-term strategy for growth. I would like to thank you for this opportunity. I have around two questions that I would like to ask you. The first question is that for net zero, you did mention your commitment right now. It does seem to be that the overall plans that you have and the demands in the market are acceleration.
In Europe we see tightening regulations, and also in the polymer side also it does seem to be that it will be included in various regulations going forward. You did mention what your plans will be, but I think that in terms of your execution, I do think that these type of regulations can start from 2024. What type of business risks do you identify, and how do you believe we can deal with these types of situations? The second question that I would like to ask you is about your petrochemical business. You did mention that from the beginning of the year, it does seem to be that the petrochemical market is weakening very rapidly.
Whether it be organic or inorganic, I do think that there may be more measures that the company may need to take to deal with such a market environment. How is the company going to defend its profitability and also try to create more growth momentum over the midterm? Thank you very much.
Yes, maybe I can address your two questions. First, about the net zero, that is a very good question. As we have mentioned during the presentation, by 2050 the overall goal is actually has been uplifted. Right now we will have carbon neutral growth by 2030 and achieve net zero by 2050. That is our new renewed commitment that we have announced today at this event.
It will be a challenging target for us, but for us, I do think that we have a very clear path that we have set for the future. For carbon reduction and also to achieve net zero, I do think that there are mainly three areas that we want to focus on. The first is reduce, the second is avoid, and the third would be compensate. Again, it would be summarized as reduce, avoid, and compensate. If we don't utilize all three of these methods, then we do think that it would be difficult. For our direct reduction, which would be reduce, and the indirect, which would be avoid, of course, that is something that we'll be refocusing on ourselves.
In terms of compensation, of course, this is something that we can do by purchasing carbon credits or other methods. A lot of the focus will be again on the reduce and avoid side. When we talk about reduce, it would be that within the manufacturing process, we do want to cut our carbon. For the NCC plants that we have, we can change the overall methodologies, or we could actually capture some of the carbon from this. Or we can increase the energy efficiency of our facilities. That would be some of the examples that we can use. We can do R&D on this and then actually commercialize some of the technology related to that. Secondly, related to avoid, this is mainly focusing on renewable energy use.
For RE100, before 2050, we do want to achieve RE100 as a company, and this is a step-by-step process for us in which we are currently executing. We are taking the steps accordingly, and we do think that that will be a very important indirect reduction methodology for us. Through this reduce and avoid and also compensate, again, by 2050 we want to reach net zero. We also talked about our life cycle assessments that we are conducting. This is another and very important process for us, because whether it be by product, by production site, we want to know how much emissions is actually being emitted. We do want to be able to quantify each of that by the different product lines and also the different sites.
We do think that having this overall assessment will be a very important tool for our net zero efforts. In addition to that, global cooperation, whether it be with the government or with the industries or with academia, we do want to have a multilateral approach because we do think that, you know, climate change is a humanity issue. It deals with all people. We do think that a global approach is necessary. For this year alone, we actually have a plan to reduce our carbon emissions by around 400,000 tons. It's this year that we are going to do that. In particular in China right now, we are going to adopt more renewable energy and also in Korea to do and reach the target that we have.
Next, to talk about the petrochemical long-term strategy, maybe to elaborate about that. Last year, as you know, around the world, if we look at the overall supply situation, it was not able to catch up with demand. It was a slightly abnormal situation. However, from this year, we do think that from the beginning of the year the market seems to be a bit different. Over the mid- to long-term, we do think that there may be a down cycle coming, and I do think that there's a lot of market consensus that is what the trend will be. Amidst such a backdrop, our strategy is like this. Rather on the upstream side, we think that our forte is on the downstream side, so the customer-facing business, and also the application business.
At the end of the day, directly with the customers and also having specs in for various products, whether it be for diapers, whether it be for photovoltaic cells, whether it be for hygiene, and plastic gloves, we actually believe that this customer-facing downstream industry is where we are the best. That is what we want to continue to emphasize. The first overall strategy that we would have is that for our premium products, which are customer-facing products, for the overall POE, photovoltaic encapsulants or whether it be for hygienic gloves, or it could be for IPA that is used for semiconductor processes. For these type of customer-facing products, we want to continue to identify and also grow these type of products. As you are aware, these are very high-margin businesses.
The second, we talked about our sustainability business, which would be the recyclable products business and also the bio and biodegradable plastics business. In this area, it's something that we're already doing. It's not a plan. For PBAT, we already have started the plant construction, and within the next 1 to 2 years, by 2024, we'll have 50,000 tons. For PLA, again, by 2025, we'll have around 75,000 capacity built out. As mentioned before, on the sustainability side, this is not just a concept for us, but it's an actual business.
We're taking commercial action, and as- As a leader in this area, if we continue to make efforts, we do believe that this will be a profitable business for us. The third area is to strengthen our customer relationships and also our global regional diversification. We do have a very strong presence in Southeast Asia and also the U.S. and Korea. We do think that there are a lot of areas that we want to continue to grow into, North America, Europe and also Southeast Asia. In the ABS area, we have already secured a production site in North America. From next year, we will start ABS compounding. For NBL, which is used for hygienic gloves, in Malaysia, we have already secured a hub, which would represent around 240,000 tons. This type of global diversification would be our third strategy.
In the premium products area, we want to continue to develop products. In the sustainability area, we want to accelerate our efforts. Lastly, in terms of global diversification, if we continue to diversify, we do think that even in a down cycle, we will be able to remain profitable.
Thank you for this answer. That was the first question, was talking about net zero and the environment. I do believe that it's a very important topic. Maybe we can move on to the next question. The next question is from Zoom again. It is from KB Securities. We have Baek Youngchan, so please go ahead.
Thank you. I am Youngchan Baek from KB. I have two questions. The first question is related to the sale of your cathodes.
I know that you're doing a lot of work in this area, and I think this is very promising. Compared to the competition, I would like to hear the advantages that you have in cathodes. The second question is that many Korean companies are very much focused on hydrogen energy. I'm just wondering what LG Chem is doing for this end. What have you done so far, and what is your R&D direction for hydrogen energy? Thank you.
Thank you very much for your questions. Regarding the cathode business, I'll answer that question. For the hydrogen R&D, I would like to ask the CTO, Yoo Ji-young , to answer that question. For the cathodes, as you are well aware, we have a long history of manufacturing experience and business experience.
We have a lot of competitiveness in the technology area, high density, long life, high nickel. That means nickel content is more than 80%. This has already been commercialized. In 2026, the high-nickel products share in the NCMA products will be more than 90%. In terms of the technology competitiveness, we are much ahead. For the single crystal cathode, it improves performance, and the gas emission is reduced by 85%. It really improves the stability and safety of the batteries. The first competitiveness is our experience and also technology. The second is that you have to have technology, but you also need to have the manufacturing capability as well. I really want to stress the competitiveness that we have in manufacturing processes.
For example, you have the firing process, and we will need to make sure that the sintering process has high productivity. It really has a determinant role in the product quality as well. In the end, we have world-class process technology level. For the high nickel products, we further improve its performance. We have the doping technology, the coating technology. In the process technology, we are highly differentiated. For the competitive edge, the second edge is process. The third one is the competitiveness that we have in metal sourcing. Up to now, with the Chinese mining companies, we have entered into joint ventures to be able to have a secure supply of metals in the long term. This also has helped us to strengthen cost competitiveness.
Globally, we are going to move beyond China and to diversify our supply base as well. This is an ongoing endeavor. As I mentioned previously, we also look at the battery recycle business. We've already entered the business. We've made the investment. As you may have heard in the U.S., Li-Cycle is the largest lithium recycle business, and we actually made the equity investment. We have an off-take contract, and we have secured 10,000 tons of nickel. We are in various utilizing opportunities and options. When talking about cathode competitiveness, you need the track record, you need the technology, but at the same time, you need the manufacturing process technology as well as metal sourcing capabilities as well.
I would like to now invite our CTO to talk about the hydrogen energy.
Good afternoon. I am Yoo Ji-young, CTO of LG Chem. In respect to the development of hydrogen technology, we're looking at two areas. First is the usage of hydrogen. In 2030, we have the carbon neutral growth and 2050 net zero goal. We have to make sure that we move from high carbon usage to low carbon emission as well. We have to do this very quickly as well. What emits carbon most is the naphtha cracker process, and that is why for this process, we use a lot of methane, and we have the heat energy source.
In respect to the usage of methane, we could reduce that portion, put hydrogen inside instead, and that will help us to have less, carbon emission as well. That requires us to change the NCC burner design, heat distribution, and also take the NOx regulation into consideration. This is a very challenging technology. We've done the simulation, we do the development, and we are slowly using this technology. This year is the pilot period, and starting from next year, we'll be able to use more and more hydrogen content going forward. The second aspect in respect to hydrogen development is the supply side. We have the blue and green hydrogen, and we have the electrolysis technology as well. Primarily, that's our goal.
In respect to LG Chem, and related to the fuel cell, we have a lot of patents, and we have a lot of R&Ds in this area. We have a lot of technology accumulated over the years. As you're well aware, in terms of electrolysis and fuel cells, the technology has many similarities. Based on our previous experience, we are aiming to develop the green hydrogen and to further develop the electrolysis system for this end. There's an ongoing R&D, and we're working with KIST in Korea, and this has been done for many, many years. There is a joint R&D cooperation and research and development underway. Lastly, we also have to look at the green ammonia that's talked about when we're talking about hydrogen energy.
On top of producing hydrogen, we also want to make sure that we get the supply of competitive ammonia, and then we do back cracking and change that back to the hydrogen, what we call the green hydrogen. This is also something that is an ongoing development.
Thank you. Now we would like to move on to the next question, which is a question from Hyunryul Cho from Samsung Securities. Please go ahead.
Thank you. I am Cho Hyunryul from Samsung Securities. I would like to first thank LG Chem for arranging this Investor Day. I have two questions. You already mentioned the recycling business, so I also want to know whether you are working with LGES to make the investment jointly.
I think that this is going to be very important for the battery business as well. In respect to the battery reuse and recycle business plan, what is the plan that you have, and what is the defined R&R between you and LGES? I know that you also have secured 2.5 trillion KRW as a result of the LGES IPO. How do you plan to use the proceeds? Can you actually talk about some mid to longer CapEx plan?
For the battery reuse recycle plan, I will address that question. Then I would like to ask the CFO to talk about the CapEx question. As you may well know, the EV market is growing rapidly at 35% per annum. Then there is the lithium nickel prices that's actually rising at an exponential level.
At the same time, we have a lot of regulations that is ongoing. When we're talking about the battery recycling ecosystem, this is being built up very quickly. Under this backdrop, you look at the EV battery life cycle, and it's still at the nascent stage, and we do have to wait a couple of years for further development. Then in respect to the recycling technology, the commercialization, we still need more development until we actually get to commercialization. The full opening of the used battery market, that timeframe, we believe that it will take place sometime around 2028 or beyond. We have about 5, 6 years left. Now we have to really be very much full-fledged in making the necessary preparations.
For LG Chem, jointly with LG Energy Solution, working with global OEMs as well. The focus is we've already started the work in building the ecosystem. You collect the used battery, and then there's a preprocessing stages as well. You need to have this ecosystem built out. Technology alone will not be able to kickstart this business. With LGES as well as the global OEMs, we have already started work on building out the ecosystem. On the technology side, as was recently reported, we are together with LG Energy Solution, have made the equity investment with Li-Cycle. There's an equity investment that we have made, which is the largest battery recycling company in the U.S. We have already started to build out the recycling ecosystem as well.
At the same time, we are under discussion with other companies as well. According to the plan that we have, we're making the necessary preparations and making progress, and we do intend to have a very committed recycling business going forward. For the CapEx, I would like to invite the CFO to answer that.
Yes. To talk about our mid- to long-term CapEx and the size that we have, I think that. Also to talk about the overall proceeds from the LGES IPO, how that is going to be used is something that I would like to talk about. As mentioned before, for LGES, after the split off that we had, for our company, most of the investment capacity that we have is being focused on the three new growth drivers. As a result of that, we do want to expand the capacity that we have in those businesses, and that's the focus that we have for the current time. As a result of that, for this year, we will actually have a CapEx of around KRW 4 trillion, which will be up by KRW 1 trillion versus last year.
For the next few years, we do believe that per year, it's probably going to be CapEx of KRW 4 trillion or above for the next couple of years. That's the expectations that we have. In addition to that, for inorganic growth, we do believe that there may be M&As that we may conduct. Accordingly, there can be situations in which we might need or require more CapEx accordingly. To actually fund this growth or the overall investments that we have, of course, at the company level, on a per year basis, we do have around KRW 4-5 trillion of internal cash flow that we are able to generate. That would be the first source of funding. In addition to that, through the LG Energy Solution IPO, our overall financial position has been improved significantly.
On a consolidated basis, including LGES right now, we don't have any borrowers. We have a net cash position. If we exclude LGES and just look at LG Chem on a standalone basis, the net debt ratio is in the mid or very low teens level. The overall financial position as a whole is very robust. Based upon this improved financial position, we want to be able to use this to maybe increase our leverage. Of course, this would be mindful of keeping a sound financial position, but we do think that we do have room to increase our leverage. In addition to the KRW 4 trillion cash flow and also the leverage, we do think that it would be sufficient to fund the KRW 4 trillion CapEx per year that we mentioned before.
For the KRW 2.5 trillion of IPO proceeds for the new growth drivers right now and for this year. Around KRW 2 trillion or more will be invested into that this year. That would be the first source, and that would be the primary source, through which we would look at.
On the webcasting side also, there are some questions that we have received, so maybe we can take a few questions. For a few of the questions during the presentation, I do think that some of them have been addressed. For the ones that have been not addressed, maybe we can focus on those first. The first question would be about new drug development. You did mention that, but we do think that to complete the development, it would take a very long period of time. Does the company have any plans to accelerate the time of profitability by licensing out some of the drugs?
As mentioned before, for the life sciences business, we do have a very bold ambition. By 2030, we do want to have two innovative global drugs, and becoming a global pharmaceutical company would be the ambition that we have. Right now, we actually have started this from the past four to five years in investments. For this year, right now we do have a gout treatment that would be in phase III, and also other clinical trial phase II products that would be taking place also. On a global basis, there are various clinical trials that are ongoing, and we do think it would be an execution year for us.
As mentioned before, the main focus that we have are on cancer and diabetes, but at the same time, cell treatment is another area that we're very interested in. We're investing in our resources into this area to acquire global, resources and leadership. At the current time, we have 10 new drug development projects, and by 2030 we want to increase this to 23. Of those, we do want to build 2 to be able to commercialize these in the U.S. and Europe. From the clinical trial basis to the commercialization and the sales and marketing process, we want to be able to be involved in the full chain. That would be our primary focus right now.
Of course, of the products that we have in our pipeline, for some of them, whether it be a licensing out or other options, there could be options that we would utilize to try to achieve early profitability. That could be a possible strategy for us. For the time being, the primary goal that we have is to directly conduct all of the development that we have. According to the phase and according to the project, of course, licensing out could be an option that we have. We do not exclude the possibility.
In addition to that, on the webcasting side, we do have one more question that has come in. Related to the battery material side, right now over the mid to long-term side, you did show the overall sales. Could you break it down by the different material areas and the profitability?
For the battery material side, I did talk about the overall strategic direction that we have. For the four main materials, we want to be preeminent. In addition to that, we do want to be a top seven player in terms of the overall production and battery materials company. We have a plan to reach KRW 2.8 trillion in terms of sales this year. Around KRW 2 trillion would be from cathodes. KRW 600 billion would be from separators, and then others would be around KRW 200 billion. It would be KRW 2.8 trillion in total for sales. We do think that it can reach KRW 8.4 trillion over the longer period of time.
Of that, of course, 6.6 would be cathodes, and 1.2 would be from separators, and then the others would be around KRW 600 billion in terms of the breakdown. By 2030, we do want to have around KRW 21 trillion, of which KRW 16 trillion or KRW 16.5 trillion would be from cathodes. Then the other 3 trillion would be from separators, and the balance would be others. This is the overall plans that we have. In terms of the profitability, I do believe that we are targeting a double-digit operating profit margin. Particularly with the NCMA cathodes and the premium products, this is an area in which our revenue contribution continues to increase.
High nickel cathodes is something that we do believe that will go up to 90% in 2026. By sourcing more competitively our methods and also by putting our full force behind our separator business, we do think that this is an area that we can continue to expand.
We'll take the next question from Zoom, and we do have many questions already on Zoom. The next question is from Woo- ho Noh from Meritz Securities.
Good afternoon. I am Woo-ho from Meritz Securities. Thank you very much for your explanation and also this opportunity to ask questions. I just heard from the CEO, and you gave us the long-term guidance for cathodes. Now, under this backdrop, you have this internal development, and we also have the external development as well. I'm just wondering what the priority would be.
At the same time, in respect to the ongoing investment, you have also the advanced materials and life sciences business, and the market is concerned about a possible spin-off. I think that that's really related to the funding requirements. If you have any spin-off plans, could you also share that as well?
For the battery materials, we want to also have new businesses, and we can do R&D, and we can also do M&A as well. For us, of course, the primary target is really to build up our internal capabilities in R&D. That is why we're spending more than KRW 1 trillion for the R&D. This will continue to be a primary focus for the company, so internal development and commercialization.
At the same time, we want to make sure that we are competitive in metal sourcing, so we have to make the investment. Also for the separator business, we also needed to do M&A. That's something that we're going to look at various areas and entertain various options to have the internal R&D development, equity investment, JV, M&A. These are all options that we will be exploring to continue to grow the battery material business and also enter the new business areas as well. I think the direction is that we want to improve the charging speed and also all solid state batteries, because the market needs is actually gravitating towards all solid state batteries as well.
We need to respond to this, and we need to make sure that we're at the most advanced stage in terms of technology to supply these changing market needs as well. We need to continue to identify new battery materials, and that could be internal R&D, equity investment, JV or M&A. When it comes to the silicon anode, we know that it actually we have to look at the high elasticity binders to limit the expansion of electrodes. We also look at the special silicon that can actually delay the heat transfer within the cells, and to improve capacity compared to the existing cathodes. We have more advanced technology. We also have the conductive agent for the anodes as well. Those things are currently under development.
In the long term, we have the pure silicon development, also the other areas. We really want to be present in the top four battery key materials as well. As I have mentioned, so we have the internal development, external cooperation, equity investment, M&A, JV, and we're looking at all of these options. Moving to the second question related to the LG Energy Solution split off. As you know, the battery market was actually growing very fast, and there was a huge CapEx burden. It was massive. In order for it to secure leadership in the battery business, for us, the only available option was the split off of the LG Energy Solution business. Because it requires KRW 1 trillion of investment every year because of the huge CapEx burden.
When you're looking at the advanced materials and life sciences, it, relatively speaking, has less CapEx requirements. Internally, we are able to sufficiently address the investment requirements. At the same time, looking at the LG Capital's infrastructure, we believe that the operational synergy is huge when we're talking about the infrastructure that's currently laid out for within the LG Chem. It really fits well with the advanced materials and life sciences and the portfolio that for these businesses. We want to still directly operate these businesses.
Yes, thank you. We do have a lot of questions, but due to the time, I think that we can take one last question, and then we will have to wrap up today's event. I think that the last question will be from Credit Suisse. It will be Min Hoon sik from Credit Suisse. Please go ahead.
Yes, thank you. This is Min Hoon sik from Credit Suisse. Thank you for sharing your vision for growth as a company. The question that I would like to ask you is that it does seem to be that you need a lot of resources for investment for the future. As of the current time, if you look at the LG IPO, which was very successful through the secondary share sale, would there be a possibility to, you know, sell more? Would it be that you could use those resources to maybe do a treasury share purchase or maybe a treasury share retirement to increase the overall value of the LG Chem company?
Cha Dong-seok will answer your question. To talk about I think that the gist of what you're asking is that for LGES and the shares that we have, in terms of the shares that we're currently holding, would there be the possibility to use those shares to actually invest more into the LGES X business that we have, and to increase the overall shareholder value, what options would we be exploring? I think that that's, you know, the point of your question. In short, I think what I can say is that a treasury share purchase is maybe something that we can talk about.
As of now, in actuality, we don't have any plans, and we have not reviewed a treasury stock purchase, because, in our view, we do believe that over the longer term, the best way to enhance shareholder value in terms of doing it the best options that we would have, is to be able to continue growth as a company, so that we can actually enhance the overall intrinsic value that we have as a company. That is a strong belief that we hold. As a result, for LG Chem, in the three growth areas that we have just mentioned, focusing on those areas, we do believe that there is significant growth that we would be able to achieve. As a result of that, naturally, our intrinsic value would be something that will continuously grow accordingly.
In terms of the overall corporate value and intrinsic value that we see rising going forward, at the end of the day, we do think that that will benefit our shareholders, and that would be the best option. At the same time, in terms of our CapEx requirements, as mentioned before, through our internal cash flow, that would be one source. Then added to that, we could have some leverage that we utilize to fund the KRW 4 trillion CapEx that we have each year. It would be sufficiently funded. As of the current time, we actually don't foresee any need to dispose of any additional LGES shares, and that is not an option that we are exploring.
Thank you. Yes. Because of all of the questions that we have today, I do think that we've run over time by around 10 minutes, but I think that we can wrap our question now. For any of those of you participating today that have not had an opportunity to ask questions, please do not hesitate to contact the IR team. Thank you once again for taking part in LG Chem's Investor Day despite your busy schedule. Thank you.