Linkedin post from Naoise McDonagh that goes into even more detail about FEOC and the implications it has for western companies involved with China:
"The geo-economic net tightens on global battery supply chains. Chinese firms won't be the only ventures shut out of US battery production; the newly issued definition of 'Foreign Entity of Concern' will shut out Australian joint ventures with Chinese firms, as well as many other such ventures globally.
The proposed FEOC rules mean that from next year new clean-energy vehicles will not qualify for the IRA subsidy of $7,500 if it contains any battery components that are manufactured or assembled by a FEOC, defined as China, Russia, Iran and North Korea. The administration is proposing a 25% ownership threshold for determining whether a company is controlled by a FEOC.
This means that the world's largest lithium mine based in Western Australia, Greenbushes, would fall afoul of the FEOC rule due to being 26% owned by Chinese-controlled firm Tianqi Lithium. Reuters reports that the Mt Marion lithium mine, also in WA, will be shut out due to being 50% owned by China's Ganfeng Lithium.
Indonesia's China-dominated domestic graphite mining and processing operations are also in the firing line.
From an Australian perspective the new FEOC definition points to a hard reality ahead for new investment in its burgeoning critical minerals sector. Investment screening of new Chinese investment will have added powerful economic rationales on top of the already powerful national security case for screening entities that are controlled by the Party, and must operate according to strategic rather than commercial logic when politics demands (discussed in detail here: https://lnkd.in/g7D98Z9G).
The New Washington Consensus is reforging global supply chain and investment incentives for one of the key industrial sectors of the 21st century. Firms, particularly in resources, that are not integrating geo-economic risk management and scenario planning into decision-making horizons face being caught cold on irreversible fixed capital investments.
From a US perspective, a big question remains for Ford in particular, concerning how this definition of FEOC will be applied to its battery technology licensing agreement with CATL. Ford will own the US-based factory, but CATL will own the licenses and IP in the batteries being produced. GM, on the other hand, is building a fully non-China supply chain, and may gain major competitive advantages over its Detroit rival from these developments."
(20min delay)