Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Korean EV battery industry expresses mixed reactions to US Inflation Reduction Act
POSCO Group's demo plant producing lithium hydroxide from a salt lake in Argentina / Courtesy of POSCO Chemical
By Park Jae-hyuk
By Park Jae-hyuk
The U.S. Inflation Reduction Act (IRA) is expected to benefit Korean electric vehicle (EV) battery makers that are set to increase their production facilities in North America, but concerns remain over their heavy dependence on critical minerals imported from China, according to industry officials, Friday.
The new U.S. law will deny tax benefits to buyers of EVs from January of next year unless at least 40 percent of critical minerals in their batteries are sourced from the U.S. or countries that signed free trade agreements with the U.S. The requirement will rise each year to 80 percent in 2027.
Data compiled by the Korea International Trade Association, however, showed that Korean firms relied on China for 84.4 percent of their lithium hydroxide imports, 81 percent of their cobalt imports and 89.6 percent of their natural graphite imports during the first seven months of this year.
Korean EV battery makers have therefore expressed concerns about difficulties in reducing their reliance on Chinese minerals in the near future.
Samsung SDI CEO Choi Yoon-ho reportedly told a local newspaper that he is concerned about the timing of the IRA's implementation, after he attended Thursday's meeting between Minister of Trade, Industry and Energy Lee Chang-yang and representatives from domestic carmakers, battery firms and semiconductor companies.
LG Chem, which signed a contract to supply over 950,000 tons of cathode materials to General Motors by 2030, has maintained a cautious stance on the IRA, waiting for the U.S. treasury secretary's announcement later this year on details about the requirements for minerals and raw materials in EV batteries. Although LG Chem has continued to reduce its reliance on Chinese minerals, it remains unclear if the company will be able to satisfy the U.S. requirements by next year.
POSCO Chemical, on the other hand, welcomed the IRA, as the company has diversified the supply of critical minerals in collaboration with its holding firm and affiliates.
“POSCO Chemical has secured lithium and nickel through its affiliate POSCO,” Hanwha Investment & Securities analyst Lee Yong-wook said. “It is also the only Korean company whose anode material business is of a meaningful size.”
The market for anode materials has been dominated by Chinese firms.