South Korea to Bolster Battery Industry by Funneling KRW 38T

South Korea will invest 38 trillion won ($29 billion) over the next five years to strengthen its battery industry, as global competition to secure battery supply chains remains fierce, the government announced on Dec 13.

According to a joint statement from a number of ministries, South Korean battery firms such as LG Energy Solution, Samsung SDI, and SK On, a unit of SK Innovation, held a 49 percent share of the global battery market excluding China as of 2022.

However, their reliance on foreign countries for key materials made diversification critical, according to the report.

The country intends to provide tax breaks and loan assistance to South Korean firms investing overseas to secure mining rights for minerals and other battery materials, as well as to strengthen financial support for companies that refine minerals.

It also intends to increase financial assistance, such as loans, guarantees, and insurance, from institutions such as the Export-Import Bank of Korea to battery industry firms, including those investing in North America, in order to meet the terms of the US Inflation Reduction Act (IRA).

South Korean battery companies have lowered their sales forecasts for 2024 as electric vehicle sales slow, owing in part to an increase in consumer auto financing costs. The announced measures, on the other hand, aimed to boost the country's secondary battery industry's competitiveness to the highest in the world in the long run, according to the statement.