South Korea Eyes American Battery Market

Alongside its exports of K-Pop and K-Dramas, South Korea is looking to add exports of K-battery-materials (we’re still workshopping the name) as a major export to North America.

What happened: South Korea’s POSCO, one of the 10 largest steelmakers in the world, announced it’s looking to take advantage of the US Inflation Reduction Act (IRA) and significantly grow its battery materials business.

• POSCO may join the ranks of other well-known all-caps Korean names like BTS and BLACKPINK, though the appeal of a massive steelmaking and battery materials company might resonate more with our readers than the general public.

What is POSCO doing? The company has already received support from Canada for $300 million CAD to build out a battery materials plant in Quebec in partnership with General Motors. Now it wants to tap into US dollars.

To qualify for tax credits from the IRA, battery makers must source their materials from the United States or other countries that have a free trade agreement with the US.

• Basically, not China.  

The problem is, most EV makers have the majority of their processing and refining of materials done in China. 

Looking ahead: POSCO has set its sights on supplying the lithium, nickel, and graphite for batteries. It plans to get its nickel from Australia and refine it in Korea. By removing China from the direct supply chain, it will be eligible for the highly desirable IRA subsidies.

Average composition of NMC lithium-ion batteries

There’s always a loophole

POSCO is still working with China through joint ventures with Chinese companies, but the plants are based in Korea. And it’s not the only Korean company taking advantage of this loophole: other Korean companies such as SK On and LG Chem have used the same strategy.

Zoom out: With China as such a large player in the EV supply chain, it will be difficult for countries to fully reduce their reliance on materials from China. Western countries are faced with the choice to have a more secure supply chain or try and hit their net-zero goals.