South Korea unveiled a 38 trillion won ($29 billion) financial package over the next five years aimed at helping local electric-vehicle battery makers diversify their supply chains as the US calls for a reduced reliance on China.
President Yoon Suk Yeol’s administration wants to boost competitiveness of the nation’s battery industry, from mining to recycling, according to an e-mailed statement from the finance ministry Wednesday.
While South Korea’s three top battery makers — LG Energy Solution Ltd., Samsung SDI Co. and SK On Co. — control nearly half the global market for EV batteries outside of China, diversifying supply chains and “internalizing” raw materials is urgent, the ministry said.
The financial aid will take the form of loans, credit guarantees, lower borrowing rates and insurance premiums for investment in manufacturing facilities in North America in order to help companies receive tax breaks from US President Joe Biden’s Inflation Reduction Act, the ministry said.
Korea’s government also plans to raise a 1.5 trillion won fund to help firms secure minerals and expand their production overseas.
President Biden is pushing carmakers to reduce their reliance on Chinese components and shape new supply chains with political allies like South Korea.
China, the world’s biggest EV and battery maker, has already announced tighter rules on the export of graphite, a key material for EV batteries, spurring Korean battery firms to hunt for alternative sources.
To speed up the recycling ecosystem in the country, Korea will also relax rules on the handling of second-hand batteries and will set up new safety rules on removing, storing and shipping spent cells.
