Korean battery makers explore new suppliers in North America, Australia under IRA

[Photo provided by SK on Co.]

South Korea’s electric vehicle battery and material makers are doubling down on efforts to reduce reliance on China in line with U.S. Inflation Reduction Act (IRA) restricting sourcing from China.

SK Innovation’s standalone battery unit SK on Co. on Wednesday signed a memorandum of understanding for stable supply of lithium with Australian lithium exploration company Global Lithium Resources in Perth, Australia, according to industry sources on Thursday.

Under the partnership, SK on will be supplied with lithium ore called spodumene on a long-term basis and will also be able to seek for opportunities to make an equity investment in Global Lithium Resources’s production projects.

The two companies agreed to further cooperate on other projects in the battery value chain.

LG Energy Solution Ltd. last week inked three deals for supply of lithium, cobalt and other key battery materials with three Canadian companies in Toronto, Canada.

It will be supplied with 7,000 tons of cobalt sulfate from Electra Battery Materials Corp. for three years from 2023, 55,000 tons of lithium hydroxide from Avalon for five years from 2025, and 200,000 tons of lithium hydroxide from Snow Lake for 10 years from 2025.

LG Energy Solution, with largest battery capacity to power EVs in the U.S. would be able to establish full North American supply chain in the field of secondary battery and EV from materials to components and finished products to respond to IRA mandates.

Korean battery makers are starting to explore new suppliers in North America and Australia to reduce reliance on Chinese suppliers. Under the IRA, tax incentives are strictly limited to EVs assembled with parts sourced from the U.S. or its trading partners on FTA.

Hanwha Solutions Corp. with solar panel production base in the U.S. also initiated reorganization of its business structure for better response to the IRA.

Its board on Sept. 23 approved the plan to spin off the department store unit Hanwha Galleria and split off part of the advanced materials business for automotive components and ethylene-vinyl acetate (EVA) sheets.

The company plans to sell some of its stake in the split-off and invest in expanding solar panel production facilities in the U.S. for tax benefits under the IRA.

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