Hyundai to buy 5 percent of Korea Zinc for $400 million

Hyundai Motor Group will buy 5 percent of Korea Zinc for 530 billion won ($400 million) to stabilize its supply of nickel, the key material in making EV batteries, as part of the Korean automaker's efforts to counter the IRA.

Kim Heung-soo, left, the head of Hyundai Motor's Global Strategy Office, and Korea Zinc President Park Ki-deok take a photo after signing a deal Wednesday. [HYUNDAI MOTOR]

Hyundai Motor Group will buy 5 percent of Korea Zinc for 530 billion won ($400 million) to stabilize its supply of nickel, the key material in making EV batteries, as part of the Korean automaker's efforts to counter the Inflation Reduction Act (IRA).

HMG Global, Hyundai Motor's U.S. subsidiary formed in 2022, said Wednesday it will acquire 5 percent of Korea Zinc, a Seoul-based battery material company, for 527.2 billion won. Hyundai Motor owns 49.5 percent of HMG Global, while Kia owns 30.5 percent and Hyundai Mobis 20 percent.

Korea Zinc will issue 1,045,430 new shares at a price of 504,333 won per share and the acquisition will be completed by Sept. 12.

Under the partnership, the two companies will jointly invest in mines to secure key EV raw materials such as nickel. They will also co-develop technologies to recycle scrap batteries.

Korea Zinc currently runs a nickel sulfate factory in Ulsan, with up to 100,000 tons of annual capacity. With the investment from Hyundai, it aims to build a 42,600-ton nickel plant in Korea, making it the second biggest nickel producer globally.

Korea Zinc will supply nickel to Hyundai starting in 2026, with Hyundai saying it aims to source more than half of the nickel it needs from Korean Zinc by 2031.

Details about the nickel amount will be announced later, Hyundai added.

“As the EV market grows, securing key battery materials will be a challenge and an opportunity for both the battery industry and automakers,” according to Korea Zinc's Choi Yun-beom.

“The partnership allows Korea Zinc to contribute to the growth of the battery industry as a partner ideally positioned for various forms of collaboration across the batteries' entire lifecycle.”

The latest partnership comes as the IRA requires EV makers to reduce their dependency on China in terms of sourcing key materials used in EV batteries to receive an up to $7,500 EV tax credit. Hyundai Motor and Kia cars do not qualify for EV tax credits, at least until 2025, as they do not make EVs in North America.

Hyundai Motor and Kia aim to sell around 3.64 million EVs globally in 2030 to become the world's third-largest EV maker.

BY SARAH CHEA [chea.sarah@joongang.co.kr]