L&F disappointed with Korea's decision to disallow its U.S. plant construction plan

[Source: L&F]

L&F, a South Korean mid-tier lithium-ion battery materials maker, has come under pressure after its plan to advance into the United States hit a snag due to the Korean government’s disapproval for its plan to build a cathode materials plant in the burgeoning EV market.

South Korea’s Ministry of Trade, Industry, and Energy (MOTIE) on Wednesday rejected L&F’s plan to build a cathode materials plant in the U.S. during a Technology Protection Committee meeting attended by Minister Lee Chang-yang, citing the company’s insufficient measures to protect state-of-the-art technologies for cathode material production.

The latest state decision will deal a blow to the company’s plan to make an inroad into America to benefit from the Inflation Reduction Act that Washington has enforced to up investment in new renewable energy production but to limit government subsidies only to environment-friendly cars produced on its soil with half of their parts and materials that must be Made in USA.

L&F stock, the third largest on the Kosdaq bourse by market cap, fell 3.40 percent to 226,900 won ($162.76) in Thursday’s early trading.

Under the country’s Act on Prevention of Divulgence and Protection of Industrial Technology, Korean manufacturers of semiconductors, batteries, and displays, which are designated as national core technologies, must gain prior approval from the government when they try to transfer their technologies or become targets for takeover.

Firms that gain financial aid from the government for research and development purposes also must gain the minister’s approval to build production facilities overseas.

“L&F received the government’s financial support for the development of the technology, but its protection measures for the technology are insufficient,” said an official from the ministry.

For tax benefits from the Inflation Reduction Act, Korean firms have to increase their local production in the U.S. The government’s disapproval of L&F will likely put a brake on other lithium-ion battery makers or battery material producers trying to advance into the American market.

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