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Battery firms on alert against Trump tariffs on Canada
The cathode materials plant of Ultium CAM, a joint venture between POSCO Future M and General Motors, is under construction in Quebec in this undated photo. Courtesy of POSCO Future M
By Park Jae-hyuk
Korean battery firms operating in Canada expressed concerns Monday about U.S. President Donald Trump's plan to start imposing 25 percent tariffs from Tuesday on imports from the North American neighbor.
Given a trilateral free trade pact between the United States, Canada and Mexico, the battery firms established their production bases in the Canadian provinces of Quebec and Ontario over the past couple of years to source minerals there and supply their products to adjacent American automotive factories in the Rust Belt.
Trump's tariff plan, however, has caused great uncertainties about their North American business, triggering a sharp decline in their stock prices during Monday's trading session.
POSCO Future M, the battery materials unit of POSCO Group, said Monday that it will preemptively brace for potential risks, mentioning the launch of a new U.S. administration and uncertain global policies.
In 2022, the Korean company established a Canadian joint venture named Ultium CAM with General Motors and started the construction of the joint venture's cathode materials plant in Quebec.
With a plan to produce 30,000 tons of cathode materials annually, the construction is scheduled to be completed by the end of this year, about a year later than initially planned, due to the sluggish demand for electric vehicles (EV).
"We decided to enter an emergency mode," POSCO Future M said in a press release after announcing that its 2024 operating profit declined 98 percent year-on-year to 700 million won ($477,000) due to the operating loss of 36.9 billion won from its battery materials business.
LG Energy Solution (LGES), one of Korea's three major EV battery makers, also addressed this issue.
The company set up a Canadian joint venture named NextStar Energy with Stellantis in 2022 and began mass production at the joint venture's Ontario plant late last year to supply battery modules to the U.S.
"It is true that planned policy changes in North America have caused grave concerns," LGES CEO Kim Dong-myung said in a letter to employees on Monday, although he expressed confidence in overcoming difficulties.
SK On, another major battery manufacturer, and EcoPro BM, a battery materials producer, have also pushed ahead with the joint construction of a cathode materials plant in Quebec with Ford Motor.
Samsung SDI, another battery maker, invested in a Canadian nickel mining company.
Solus Advanced Materials is also building a plant in Canada to supply copper foil for EV batteries.
Those companies have yet to disclose their countermeasures against the escalating tensions between the U.S. and Canada.
Just before the 25 percent tariffs took effect, Trump told reporters that he would have a phone call on Monday (local time) with Canadian Prime Minister Justin Trudeau, although the U.S. president denied expectation of "anything very dramatic."