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Korean battery makers keep close tabs on US Infl. Reduc. Act

[Allman]

There must be a frenzy of competition now for Canadian critical minerals such as cobalt ...  

South Korean lithium-ion battery cell makers are expected to be beneficiaries once the Inflation Reduction Act comes into force in the United States, as the bill is likely to induce US electric vehicle makers to cut their reliance on Chinese battery components.

But at the same time, Korean battery makers are now pressured to preemptively diversify their import sources of key materials out of China, as the new US bill is apparently aimed at countering China’s influence on the EV supply chain.

The proportion prescribed in the new bill will increase gradually. By 2028, battery metal value extracted or processed within the US or its trading partners must account for at least 80 percent. By 2030, the entire battery must be produced within North America.

Given that Korean battery makers have already secured a combined production capacity of 380 gigawatt-hours within North America, which could in theory power 4.2 million EVs each year, analysts say Korean battery firms are the easiest alternatives for carmakers to meet the new requirements.

The new bill, coupled with the US-Mexico-Canada Agreement that requires at least 75 percent of auto content to be made in North America, “will trigger an upshot in demand of Korea-made battery cells among US automakers, thanks to their localized battery value chain,” noted Song Sun-jae, an analyst at Hana Securities.

But in the long run, Korean firms are at a crossroads over their use of Chinese materials

Neither of the three companies have disclosed their dependence on Chinese materials, but government data has indicated that over 90 percent of their nickel, cobalt and manganese precursors used as battery cathode materials were imported from China last year.

https://www.koreaherald.com/common/newsprint.php?ud=20220809000830