South Korea to provide battery industry more support

Market: Battery materials
10/04/23

South Korea has announced on 7 April a public-private joint strategy to advance the domestic battery industry through a variety of support measures.

The Export-Import Bank of Korea and state-owned Korea Trade Insurance will provide around 7 trillion won ($5.3bn) worth of loans and guarantees to support battery and battery material firms' investments in North America within the next five years. Other financial support such as higher credit lines, interest rate cuts and lower insurance premiums will also be provided.

Investment incentives will be granted for material and minerals processing firms, although details were undisclosed, as the country's trade and industry ministry (Motie) cites the heightening importance of material firms following the US' Inflation Reduction Act (IRA) that was signed into law in August 2022.

South Korea seems determined to take full advantage of the IRA's $7,500 tax credit, which was split into two parts depending on whether the critical minerals and batteries are sourced from US or its free-trade partners. Minerals sourced from South Korea are currently qualified under the critical mineral requirement of the new IRA guidance for vehicles to receive the first portion of the tax credit.

The government will also be launching W50bn worth of lithium-iron-phosphate (LFP) battery research projects to support domestic battery firms in the global market, as part of its market penetration schemes for LFP batteries. A W150bn next-generation battery research and development feasibility study will also be launched to promote cutting-edge battery technology.

The government will also in the first half of 2023 designate a special high-tech strategic industrial complex that will provide power and wastewater treatment facilities to battery and national strategic technology firms, while raising the floor area ratio cap by 1.4 times for these firms' establishments in the complex.

South Korea in October 2022 published a list of national strategic technologies it considered to be of "strategic significances", with secondary cells — also known as rechargeable batteries — on the list.

Motie previously in February announced multiple new budgets to fund its domestic electric vehicle (EV) and battery technology sectors. The new budgets included W13.4bn to support the development of eco-friendly anode materials, electrolyte and LFP battery cells, as well as W19.63bn to develop and support carbon neutral technologies and waste recycling.

But the Korea Automobile Industry Association called for greater government support in March, asking for "ground-breaking investment support measures" in the face of trade protectionism to support the domestic EV industry.

"Public and private sectors must work together to solve major challenges to effectively respond to the rapidly changing post-IRA global landscape," Motie minister Lee Chang-yang said, adding that the government will provide full support to domestic firms.

By Joseph Ho

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02/05/25

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30/04/25

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