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| POSCO Future M CEO Kim Jun-hyung speaks during a ceremony to declare the company's new vision at POSCO Center in Seoul, Monday. Courtesy of POSCO Future M |
Battery materials producer braces for all possible scenarios for US IRA
By Park Jae-hyuk
POSCO Future M will modify its agreements with Chinese companies on the establishment of their joint ventures here if those joint ventures become subject to "foreign entities of concern" under the U.S. Inflation Reduction Act (IRA), the battery materials producer's chief said Monday.
"If the U.S. restricts Chinese firms from holding a certain amount of stakes in their joint ventures here, we will adjust our Chinese partners' stakes in joint ventures with us to become smaller than the amount," POSCO Future M CEO Kim Jun-hyung told the press.
The CEO added that his company is independently developing core technologies to brace for the IRA, although it is cooperating with its Chinese partners at this moment to secure nickel.
His remarks came as concerns are growing that the U.S. could prevent Chinese firms from using joint ventures with Korean companies to circumvent the IRA. POSCO Future M agreed with China's CNGR and Huayou Cobalt to establish joint ventures here.
When the U.S. Department of the Treasury announced guidance on the IRA's electric vehicle (EV) tax credit earlier this year, it said that beginning in 2024, an eligible clean vehicle may not contain any battery components that are manufactured by a foreign entity of concern and beginning in 2025, an eligible clean vehicle may not contain any critical minerals that were extracted, processed or recycled by a foreign entity of concern.
The department, however, has yet to give a definition of a foreign entity of concern under the IRA.
POSCO Future M said it is aware of the fact that Chinese companies have recently expanded their presence in Korea to avoid the IRA.
To brace for all possible scenarios, the POSCO Group affiliate unveiled plans to gradually reduce its reliance on China by securing key minerals from countries that are not subject to the U.S. regulations.
In addition, the Korean firm expressed an optimistic outlook that the IRA may help it become the leading anode materials supplier in the non-Chinese market. POSCO Future M has lagged behind its Chinese competitors in the anode materials market, due to the significant difference in electricity bills between the two countries.
"We will continue to invest in the synthetic graphite sector because the U.S. is not the only country that wants to cut reliance on China," Kim said.
POSCO Future M is also considering building a factory in Europe because the European Union is likely to come up with regulations similar to the IRA.
"We have continuously received calls to build a factory in Europe from original equipment manufacturers and newborn battery firms in the region," Yoon Young-joo, POSCO Future M's director of energy materials strategy, said during the press conference. "We will assess possible benefits before we decide to build a European factory."
During the press conference, POSCO Future M also disclosed its long-term goal of generating 43 trillion won ($32 billion) in sales and 3.4 trillion won in operating profit by 2030. By then it seeks to produce 1 million tons of cathode materials and 370,000 tons of anode materials annually at its manufacturing plants worldwide.
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