South Korea launches government-backed battery alliance to source key metals

SOUTH Korea said on Tuesday (Nov 1) that it has launched the government-backed battery alliance to better source key metals, as part of President Yoon Suk-yeol administration’s strategy to strengthen the growing battery industry.

The country, home to major battery makers LG Energy Solution, Samsung SDI, and SK Innovation’s SK On, is seeking to bolster supply chain stability and metals to become a major player in the field, which is dominated by China.

“We are seeing growing uncertainties in the (battery) industry due to reorganisation of supply chains in major countries _ joint strategies between public and private sectors have become more crucial than ever,” said Chang-Yang Lee, Minister of Trade, Industry and Energy, in a statement.

South Korea’s exports of lithium-ion batteries rose 16.7 per cent to US$800 million in October from the same month a year ago, while total exports shrank 5.7 per cent to snap a 23-month gaining streak, trade ministry data showed.

The South Korean government’s support comes as the US Inflation Reduction Act is set to affect the battery industry. From next year, new rules will require that at least 40 per cent of the monetary value of critical minerals for batteries be from the US, or an American free-trade partner, in order to qualify for US tax credit. That share will rise to 80 per cent in 2027.

South Korea’s three major players, which supply to major automakers including Tesla, General Motors Co and Volkswagen among others, together command more than a quarter of the global electric vehicle (EV) battery market, according to SNE Research.

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Analysts said the new US battery rules could benefit the South Korean firms, as all three major battery makers already have production sites in the US.

Kang Dong-jin, an analyst at Hyundai Motor Securities said that “although South Korean battery makers still need some time to figure out how to meet those mineral sourcing rules, their experience in the EV battery business and joint ventures with material makers will help the company better consolidate their presence in the US EV market.” REUTERS