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[Alpha Biz=(Chicago) Reporter Kim Jisun] The U.S. has decided to provide subsidies to battery companies with less than a 25% stake in China.
As a result, South Korean battery makers are expected to seek a strategy to diversify their supply chains in the long run while first pulling down their stake in the joint venture (JV) in China in the short term.
A number of domestic material companies, including LG Chem, POSCO Holdings, POSCO Future M, and Ecopro, have established or prepared JV with Chinese companies to secure stable raw materials.
The LG Chem will currently invest 1.2 trillion won with China's Huayou Cobalt to build a precursor plant in Saemangeum, North Jeolla Province, and 500 billion won to build an anode material plant in Gumi, North Gyeongsang Province. The Chinese share of these joint factories is known to be 49% in Korea and 51% overseas.
POSCO Holdings and POSCO Future M also signed a joint venture agreement (JVA) with China's CNGR in June to produce nickel and electric balls and decided to invest 1.5 trillion won.
If China uses minerals produced by JV with a stake of more than 25%, South Korean battery material companies will have to lower their stakes in China or sell JV's production volume in markets other than the U.S. because they will not be able to receive subsidies from the Inflation Reduction Act (IRA) electric vehicles starting next year.
Battery cell companies such as LG Energy Solutions, SK On and Samsung SDI are closely watching the fact that the U.S. Treasury Department has not made a clear position on Chinese battery companies' entry into the detour, just like Ford and CATL's joint plant in China.
The U.S. government was based on whether a Chinese company that provides the technology actually controls the overall production when signing a licensing agreement that uses the technology needed to produce battery parts and core minerals. Currently, Ford and CATL are building battery plants in Michigan in the form of Ford's 100% stake and CATL's participation only in technical support and factory operations.
AlphaBIZ 김지선(stockmk2020@alphabiz.co.kr)
