 |
| gettyimagesbank |
By Lee Kyung-min
Korea needs to diversify the current global supply chain to reduce its growing reliance on China for lithium, a key raw material needed to produce battery cathodes, a report showed, Thursday.
Data from the Korea International Trade Association (KITA) showed that Korea's monthly imports of lithium from China averaged 64 percent in the first seven months of this year, up from a yearly average of 59 percent a year earlier. The annual figure is up further from 47 percent in 2020.
Imports of lithium from China in the first seven months spiked to over $1.61 billion (2.3 trillion won), up by more than 47-fold from the year before. It was led by a 50-fold year-on-year increase of $1.47 billion in the import of lithium hydroxide, more than 90 percent of which comes from China.
The rapid increase in the import of the key material will disturb the local battery industry ecosystem, heightening the risk of supply crunches and subsequent disruptions in overall production not only in electric vehicles (EVs) but also in other key manufacturing industries, the report said.
Alternatives needed
"Korea will be crippled in the event of China-triggered supply crunch risks unless it is supported by government assistance to foster green lithium mining and smelting industries, and cultivates key material supply partners," the KITA report said. "We need to seek ways to build and maintain close relationships with Australia and Argentina as promising alternative suppliers to China."
A major disruption in the local battery manufacturing is expected, if Korea and China experience a conflict over climate change issues or other political friction, according to the report.
"The China-centered lithium supply chain could trigger a supply-demand mismatch, a reason why Korea should map out measures to prevent the grim scenario."
Also advancing the view is the country-of-origin issue, a thorny topic highly likely to be dominated by U.S.-China political volatility regarding global EV makers.
The highly contentious U.S. Inflation Reduction Act (IRA) will deny state subsidies to American purchasers of EVs that use batteries made outside the country or with raw materials from China.
EVs that use batteries made from China-sourced raw materials could, the report said, become unpopular in the global market, a scenario Korea should prepare for through close monitoring.
"Korea should outline risk management plans while taking the lead in discussions on the Indo-Pacific Economic Framework (IPEF) to build supply chains outside China."
![[VIDEO] Filipina K-pop idol and K-drama actress react to stereotypes about the Philippines](https://img.koreatimes.co.kr/upload/thumbnailV2/230201chantyjoyce2web_5891a49058fb1.jpg/dims/resize/178/optimize)
![[INTERVIEW] Tati Gabrielle, actress of Korean, African-American descent, feels proud of her heritage](https://img.koreatimes.co.kr/upload/thumbnailV2/d2f45162b11d4965a7168093560f59e3.jpg/dims/resize/178/optimize)
