Big battery alliance brings government and companies together

Korean battery companies are investing 50 trillion won into research and manufacturing to expand their market share, with the government chipping in 1 trillion won for R&D.

Minister of Trade, Industry and Energy Lee Chang-yang at a meeting with the CEOs of Korea's largest battery makers - LG Energy Solution, SK On and Samsung SDI - as well as executives from related companies, including Hyundai Motor, Posco Chemical and Korea Mine Rehabilitation and Mineral Resource Corporation, at a hotel in Seoul on Tuesday. [MINISTRY OF TRADE, INDUSTRY AND ENERGY]

Korean battery companies are investing 50 trillion won ($35 billion) into research and manufacturing to expand their market share, with the government chipping in 1 trillion won for R&D.

The goal is a 40 percent share in the rechargeable battery market globally by 2030.

Of the 50 trillion won, 19.5 trillion will go into R&D and 30.5 trillion won into facilities. A minimum of 16,000 people will be trained at battery academies. Korea's market share in rechargeable batteries is currently 25 percent. China's is 55 percent.

The Ministry of Trade, Industry and Energy on Wednesday laid out a plan with key battery makers, including LG Energy Solution, SK On and Samsung SDI, to boost the sector during a meeting held in Seoul.

“As major countries are reorganizing the supply network centered on their own interests, uncertainties in the industry are increasing,” said Minister Lee Chang-yang. “However, the crisis today could be a new growth opportunity.”

The R&D investment will go toward increasing the range for the average EV from 500 kilometers to 800 kilometers.

LG Energy Solution, Korea's largest battery maker, will be speeding up the development of the more reliable and safe solid-state batteries. The company was initially targeting the commercialization of the solid-state battery in 2027, but is now aiming for 2026.

The company announced in June that it will be building the industry’s first 4680 cylindrical battery production plant, in Ochang, North Chungcheong.

In March, Samsung SDI started building a solid-sate battery pilot line in Suwon Gyeonggi, while SK On is planning to develop the world’s first high-nickel battery by 2024.

The 4680 indicates the size of the batteries, which are 46 millimeters (1.8 inches) in diameter and 80 millimeters in length. Cells of this size are used by Tesla.

One of the goals is to double the production capacity of key materials.

Battery production capacity is to be increased from 39 gigawatt hours in 2021 to 60 gigawatt hours in 2025. Anode production will be tripled from 250,000 tons to 790,000 tons during the same period, and cathode production will be doubled from 70,000 tons to 150,000 tons.

The government-private-sector battery alliance will seek out key resources by diversifying souring to resource-rich countries such as Australia and Indonesia.

State-owned Korea Mine Rehabilitation and Mineral Resource Corporation will be leading the search for partners.

The government has already signed memoranda of understanding with Australia, Canada and Chile.

Korea will be participating in refining key minerals, especially in countries that have free trade agreements with the United States, such as Australia and Canada.

State-owned financial institutions, such as the Korea Trade Insurance Corporation and the Export-Import Bank of Korea, will guarantee and directly lend 3 trillion won for excavation and refinery projects.

Since U.S. President Joe Biden signed the Inflation Reduction Act (IRA) made into law, which prohibits subsidies for the purchase of EVs with batteries made with Chinese minerals or components, the Korean government and battery companies have been working on diversifying battery mineral sourcing.

Korean battery makers rely heavily on China for key materials. They buy more than 84 percent of the lithium hydroxide, 64 percent of the cobalt and 90 percent of the natural graphite they use in batteries from China.

“The government and the industry through the battery alliance have to overcome the crisis and develop a new future as a ‘one-team’ at a time when a joint strategic effort is needed more than ever,” Lee said.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]