RNU (ASX) General Discussions

Originally posted by Normandy7: ↑

Korea needs 2-year grace period on IRA, battery makers plead
The BlueOval SK Battery Park Kentucky in Glendale, Kentucky. SK On and Ford are building two EV plants there. [SK ON]
The U.S. government must give at least a two-year grace period before the rules for battery materials under the Inflation Reduction Act (IRA) take effect, Korean battery makers insist.

The plea comes as Korean manufacturers are speeding up the discovery of new non-Chinese companies to source materials like graphite, the main product in EV battery-making with a supply that is currently heavily dependent on Chinese imports.

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“We’ve been exerting all efforts to diversify the supply chain of raw materials, but it is realistically impossible to cover the growing demand from North America,” said a spokesperson for SK On on Tuesday.

“A two-year grace period is essentially needed for us, as well as for all trusted battery and battery materials manufacturers as we collectively seek to shift the supply chain.”

Choi Yoon-ho, left, CEO of Samsung SDI, and Mark Stewart, Stellantis chief operating officer for the North American region, shake hands after signing an agreement to invest $2.5 billion to build an EV battery factory in Kokomo, Indiana, in May 2022. [SAMSUNG SDI]

Korean battery makers recently sent letters to the U.S. Treasury Department requesting a delay in the implementation of IRA rules on critical minerals to Jan. 2027 to give them enough time to find a stable supply chain alternative to China.

“It is estimated that it would take at least three to four years to locate and secure non-Chinese graphite suppliers to build a secure graphite supply chain outside of China,” SK On appealed in a letter. “We therefore request a transition period of two years for battery manufacturers.”

Under the tightened IRA regulations, an eligible clean vehicle may not contain any critical minerals that were extracted, processed, or recycled by a foreign entity of concern (FEOC), which refers to any entity that is owned, controlled, or subject to the jurisdiction of the governments of China, Russia, North Korea and Iran.

Critical minerals include lithium, cobalt, nickel, tin, tungsten and graphite.

Ultium Cells employees work at its battery manufacturing plant in Lordstown, Ohio. Ultium Cells is a 50:50 joint battery venture between LG Energy Solution and General Motors. [LG ENERGY SOLUTION]
Samsung SDI called for the inclusion of low-value anode materials like graphite as “non-traceable battery materials” under FEOC requirements.

“Graphite, in particular, is more difficult to track because cell manufacturers frequently utilize a mix of both synthetic and natural graphite in their batteries, increasing the number of suppliers to track," Samsung SDI said in the letter. "Graphite is a relatively low-value input for batteries, accounting for only three to four percent of the value of the battery."

Korea imported 97 percent of natural graphite from China last year, according to the Korea International Trade Association.

China is home to four of the world’s five biggest lithium-processing companies, including Ganfeng Lithium in Jiangxi. In terms of graphite, 80 percent of the world's supply is mined in China, and six of the largest graphite producers are headquartered in China.

SK On has $2.6 billion EV battery-manufacturing facilities in the U.S. state of Georgia and is committed to investing $11.4 billion in three new factories in Kentucky and Tennessee through a joint venture with Ford Motor.

Samsung SDI is building two factories with Stellantis in Indiana that are worth up to $6.5 billion. It also partnered with General Motors to build a $4 billion plant in Indiana.

SK On recently signed a supply deal for Colorado-based Westwater Resources to source up to 34,000 tons of graphite from 2027 to 2031.

LG Energy Solution in early February signed a one-year deal with Wesfarmers Chemicals, Energy & Fertilisers (WesCEF), an Australian lithium producer under Wesfarmers, to source 85,000 tons of spodumene concentrate, feedstock for lithium extraction.

It amounts to 11,000 tons of lithium hydroxide and battery cells that can power 270,000 high-performance EVs with a range of more than 500 kilometers (311 miles) per single charge.

“The IRA is an uneven playing field,” said Kim Pil-soo, an automotive technology professor at Daelim University College. “It’s not a problem that companies can solve on their own. The Korean government should launch negotiations with the U.S. government to delay the implementation.”

“The key here is securing enough time for Korean companies to prepare themselves to respond.”

BY SARAH CHEA [[email protected]]

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I’m sure they would have a better argument regarding delaying the IRA if they can show that they have deals with non Chinese suppliers. Hopefully something comes from the Korea conference.

I would like to see then starting the mine ASAP and then take their time on the more expensive PSG plant as that will cost more. The income from the flake will help get the PSG plant up and less reliant on equity deals.

POSCO seems a bit quieter than usual. Hope something is brewing there. They certainly do have big ambitions.

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