South Korean battery upstream suppliers courted by global carmakers since IRA

[Provided by Posco Chemical]

South Korea’s battery component companies are being courted by global carmakers as they are required to cut off sourcing from China to make their electric cars eligible for tax credit in the United States under the Inflation Reduction Act.

Posco Chemical’s Chief Executive Officer Min Kyung-zoon told the audience in the battery day event on Tuesday that it has been in talks with three U.S. automakers to build anode materal plant in North America and would be able to share details soon.

Upon a deal, the chemical unit under steelmaking giant Posco capable of producing both cathode and anode materials for batteries, would be building its first overseas plant.

Anode is essential in producing high density batteries. Chinese entities dominate about 70 percent of the global market. Other components are cathode, electrolyte and separators.

An official in the battery business said that the U.S. carmakers have been seeking out companies to replace Chinese suppliers since IRA went into effect.

Korean makers in the upstream of the lithium battery industry chain have benefited from Korean battery majors’ broadening influence in the North American market.

In July, Posco Chemcial said it agreed to supply cathode active material to a joint venture between General Motors and LG Solution from 2025. In May, it agreed to set up a venture with GM in Canada to produce cathodes for the U.S. company’s electric cars.

LG Chem also agreed in July to provide GM with more than 950,000 tons of cathode active material over eight years through 2030. This is enough to power approximately 5 million EVs.

Carmakers realize that securing battery components is important for technology, cost efficiency and establishing a stable supply chain. That’s why more are joining hands with parts maker.

Global carmakers are also investing in mining companies like those in Australia to reduce their reliance on Chinese counterparts. GM said last month it will invest up to $69 million in Australia’s Queensland Pacific Metals to secure supply of nickel and colbalt. Stellantis also signed memeorndum of understanding last month of Australia’s GME Resources and 50-million-euro ($49 million) investment in Germany’s Vulcan Energy Resources in June.

Collaboration will become active as more weans off reliance on Chinese battery materials suppliers.

By Lee Yoon-jae and Kyunghee Park