Korea to offer $5.3 billion in funding for battery industry

Minister of Trade, Industry and Energy Lee Chang-yang, left, speaks during a meeting at Korea Evaluation Institute of Industrial Technology in Jung-gu, Seoul, Friday. Yonhap

By Lee Kyung-min

Local battery manufacturers with robust growth prospects in North America will be eligible for a combined 7 trillion won ($5.3 billion) in government funding in the form of loans and guarantees over the next five years, the industry ministry said Friday.

Tax credits will also be expanded and an increase in research and development (R&D) investment projects will be outlined.

These are measures announced by the Ministry of Trade, Industry and Energy on ways to bolster the competitiveness of the local battery industry, in preparation for the recently unveiled guidelines of the U.S. Inflation Reduction Act (IRA).

Local manufacturers of lithium, phosphate and lithium iron phosphate (LFP) batteries will be able to fortify their capabilities through 50 billion won in combined research grants.

Of the 7 trillion won funding, the Export-Import Bank of Korea and K-Sure, the trade insurance corp., will provide loans and guarantees to local firms making facility investments in North America.

The borrowing limit will be increased by 10 percentage points. Borrowing rates will be lowered by as much as 1 percentage point.

Battery component businesses possessing what the government recognizes as strategic national security technologies will be able to use 1.4 times the land currently allowed for industrial use. Manufacturing infrastructure, including power and wastewater treatment facilities, will be built in the first half.

The government will commission a 150 billion won feasibility study to advance the technological capabilities of Korea's battery manufacturing industry.

The study will be part of a 1.6 trillion won investment pledged by the country's top three battery manufacturers, LG Energy Solution, Samsung SDI and SK On, over the next five years.

“The government will provide full support so that local firms can gain a competitive edge in the global market,” Minister of Trade, Industry and Energy Lee Chang-yang said at the Korea Evaluation Institute of Industrial Technology in Jung-gu, Seoul.

The policy package is the latest in the government's measures to bolster the competitiveness of Korea's leading growth driver industries.

The government said in March that 300 trillion won in investments will be drawn from the private sector to establish the world's largest high-tech semiconductor cluster in Gyeonggi Province surrounding Seoul by 2042.

The investment, handled solely by Samsung Electronics, is destined for the Yongin cluster in the province.

The cluster will create a Samsung chip belt connecting Giheung, Hwaseong, Pyeongtaek and Yongin, fortifying the chipmaker's foundry capacity.

Chipmaking accounts for 5.6 percent of the country's gross domestic product (GDP), 24.2 percent of total facility investments and 19.4 percent of exports.