Yoon pledges more support to secondary battery industry

Economy

Published: 02 Aug. 2023, 19:38

Yoon pledges more support to secondary battery industry

President Yoon Suk Yeol, center, and other delegates including LS Group Chairman Christopher Koo, fourth from right, attends an investment ceremony held at the Gunsan Saemangeum Convention Center in Gunsan County, North Jeolla, on Wednesday. [JOINT PRESS CORPS]

President Yoon Suk Yeol promised more government support for the nation’s secondary battery industry, especially in the reclaimed land of Saemangeum, North Jeolla.

“Secondary batteries, alongside semiconductors, are a central strategic asset of our country and the center of a global technology race," Yoon said on Wednesday at the Gunsan Saemangeum Convention Center, North Jeolla, where he attended an investment agreement ceremony, despite being the first day of his weeklong summer vacation.

"In this field, our companies have the world's top manufacturing competitiveness thanks to advanced technology and production capacity," he added.

"I consider the investment agreement between LS and L&F secondary battery here today as meaningful," Yoon said. "It's greatly meaningful that this investment will not only localize materials for secondary batteries, which had largely been dependent on overseas markets, while establishing an independent and stable supply network."

He especially noted that since his administration had taken office, 30 companies have promised to invest a combined 6.6 trillion won ($5.08 billion) at the reclaimed land in Saemangeum thanks to the government's support.

"That's 1.6 times more than the investments [at Saemangeum] during the five years of the previous government," Yoon said.

According to the presidential office, the investments are quadruple the 1.5 trillion won investment that Saemangeum Development and Investment Agency (SDIA) was able to attract from the private sector over the past nine years since it was first founded in 2013.

"This is just the beginning," Yoon said. "The government will fully provide customized support so that more high-tech companies and foreign investments will gather at Saemangeum."

The government in June designated an industrial complex at Saemangeum as an international investment promotion zone, providing a range of tax incentives and exemptions.

Domestic and foreign companies will be given three-year exemptions from corporate and income taxes if they start a new company or install a new facility at the industrial complex in Saemangeum.

Investors will also receive 50 percent cuts in corporate and income taxes for an additional two years.

Yoon was attending the signing of a 1.8-trillion-won agreement between LS and the Saemangeum development and investment agency as well as the North Jeolla government to expand the secondary battery industry at Samangeum, including building a precursor production plant.

In June LS and L&F agreed on investing 1 trillion won in building a battery material plant at Saemangeum.

LS will own a 55 percent stake in the tentatively named LS-L&F Solution, while L&F will own the remaining 45 percent.

The plant, slated for groundbreaking later this year, is expected to create a minimum of 1,400 jobs.

LS expects the plant to be completed between 2025 and 2026. The goal is to raise production to 120,000 tons by 2029.

"The investment of the LS-L&F Battery Solution at Saemangeum aims to lower the dependency of battery precursor from China, which is currently 80 percent," said LS Group Chairman Christopher Koo. "It is also to realize K-battery as a major superpower in secondary batteries."

Precursors are raw materials used to make cathodes and are produced by combining materials such as nickel, cobalt and manganese. They account for 70 percent of the cost of cathodes, the material that accounts for 40 percent of battery costs.

Daegu-based cathode producer L&F became the first company in the world to mass-produce high-nickel cathodes in January 2021.

Clients include the world’s No.1 EV producer, Tesla.

The LS and L&F joint venture was the latest example of Korean companies rushing to build their own battery plants at Saemangeum this year.

In March, SK On announced a 1.2-trillion-won joint venture with EcoPro and China’s Green Eco-Manufacture to build a battery precursor plant with an annual production capacity of 50,000 tons.

This is the second venture between the three companies. Last November, they agreed to jointly build a facility to produce mixed hydroxide precipitate, an intermediate nickel product used in battery precursors.

LG Chem in April announced a 1.2-trillion-won joint venture with China’s Zhejiang Huayou Cobalt to build a battery precursor plant at Saemangeum.

The plant is targeting an annual capacity of 50,000 tons.

Korean companies have been increasing the production of EV batteries in Korea in hopes of avoiding restrictions under the U.S. Inflation Reduction Act.

Under IRA regulations, to be eligible for the full $3,750 tax credit on EVs sold in the United States, 40 percent of the battery's critical materials must be supplied by the United States or countries with which the United States has an FTA with.

EVs that install batteries with precursors manufactured in Korea will be eligible for the U.S. government tax credits, even if the materials are from China.

The government in November last year announced plans to expand Korea’s global market share in secondary batteries to 40 percent by 2030.

In the first half of last year, China led the market with a 56.4 percent share, while Korea trailed behind with 25.8 percent and Japan with 9.6 percent.

Yoon also attended the opening ceremony of the 25th World Scout Jamboree at Saemangeum.

Some 43,000 gathered in Buan County to celebrate the biggest youth event, held every four years.

This is the second time that Korea is hosting the jamboree. The first time was in 1991.

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