SK to invest $1.17 bil. in Hungary ahead of US ruling
Corporate logos of LG and SK are seen in this photo, Friday. Korea Times file
By Kim Yoo-chul
By Kim Yoo-chul
SK Innovation (SKI), the battery affiliate of SK Group, said Friday it will invest 1.3 trillion won, or $1.17 billion, to build a new battery factory in Hungary and expand output capacity in Europe.
“SKI's board approved a plan to invest in a new battery factory in Ivancsa, Hungary. The new plant, which will have the largest capacity in terms of battery output volume compared to two existing plants in Hungary, will go online starting in 2023,” the company said in a filing to the Korea Exchange (KRX).
SKI did not specify the estimated battery output capacity of the new factory. However, sources involved with the issue said the estimated annual manufacturing capacity of the new facility would reach at least 10 gigawatts per hour (GWh) in the best-case scenario, increasing from the current 7.7 GWh and 9 GWh at its first and second plants in Hungary, respectively.
SK Group let Hyundai Engineering handle the entire construction of the first two battery plants in Hungary. But SK's construction affiliate, SK Construction, will handle the construction process of the new plant. The city of Ivancsa is located near the assembly lines of Ford Motor Company and Mercedes-Benz, both of which are SKI's key battery clients.
Earlier on Friday, SKI said it suffered a 2.56 trillion won operating loss last year, as a result of the continued slump in its oil refining business in the wake of the COVID-19 pandemic. Specifically, overall sales volume fell due to sluggish global demand for petrochemical and chemical products, as well as declining margins of major products. SKI is Korea's top oil refiner. However, its battery business division reported growth last year in terms of revenue.
During a conference call to investors upon releasing its fourth quarter results, SKI said it expects to see substantial growth in its battery business this year, as the company is set to expand its total battery output capacity to 40 GWh, a four-fold increase from 2019.
On a related note, the U.S. International Trade Commission (USITC) is set to make a final ruling on February 10 in a case that involves SKI's alleged misappropriation of LG Energy Solution's intellectual property (IP). The preliminary ruling by the USITC was in favor of LG Energy Solution, and the two companies are still split over the compensation amount, because SKI was said to have offered a “few million dollars” to LG Energy Solution. The LG Group affiliate did not accept that amount, citing SKI's “willful engagement” to hurt LG's IP before the dispute began three years ago.