Korea to offer 7 trillion won of support to battery makers in response to IRA

Trade Minister Lee Chang-yang and CEOs of key local battery makers and material companies hold a meeting Friday to discuss the country's financial support. [NEWS1]

Korea will offer 7 trillion won ($5.3 billion) of financial support for its battery makers as a major effort to respond to the U.S. Inflation Reduction Act (IRA).

The support includes loans and guarantees, as well as some policies like expanding loan limits, lowering interest rates and insurance costs, and a new project to develop cheaper batteries that are prevalent in China.

The Ministry of Trade, Industry and Energy elaborated on the aid plan during a meeting on Friday with a local battery alliance that includes key battery and materials players like LG Energy Solution, Samsung SDI, SK On and Posco Future M.

The Export-Import Bank of Korea, otherwise known as Eximbank, and the Korea Trade Insurance will offer up to 7 trillion won of loans and guarantees.

The loan limit will be expanded by 10 percentage points, while the interest rate will be lowered by 1 percentage point.

Insurance costs will decrease by up to 20 percent by the Korea Trade Insurance.

The Korean government also said it will invest more than 50 billion won in supporting battery makers to develop lithium iron phosphate, or LFP, batteries. LFP batteries, which are 90 percent dominated by CATL and BYD, are increasingly favored by global automakers due to their low price and fewer risks related to fire.

“To effectively cope with the fast-changing situations after the IRA, both the government and private companies must cooperate to find the countermeasures,” said Trade Minister Lee Chang-yang.

“The government will spare no expense to help Korean companies to make results in the global market.”

The government-private-sector battery alliance was formed in November last year, with a goal of grabbing a 40 percent share of the battery market globally by 2030.

Korean battery makers will hold 50 percent of the North American battery market by 2025, according to a recent report by Goldman Sachs.

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