Korea Stepping In
Following the implementation of the U.S.’s Inflation Reduction Act (IRA), the target market for Korea-made battery materials is rapidly reorganizing, with anode materials, known as the “heart of the battery,” being representative. From January to July this year, the global export scale of South Korea’s anode material has grown nearly 1.5 times compared to the same period last year, with a noticeable increase in exports to the United States.
According to the Korea Trade Association on Aug. 7, the global export of anode materials from January to July amounted to $9.84 billion (approximately 12.84 trillion won), a 44.73% growth from the same period last year ($6.799 billion).
Particularly notable is the increase in exports to the U.S., which grew by 178% from US$661 million last year to US$1.836 billion this year. In contrast, exports to China only increased by 13%, from US$2.991 billion last year to US$3.376 billion this year.
The rapid growth of k-anode material exports to the U.S. is due to the influence of the IRA that started last August. While the IRA says over half of components like separators must be manufactured and assembled in North America, anode and cathode materials are classified as “constituent materials” similar to essential minerals and thus enjoy tax benefits even if produced in South Korea, a country that has an FTA with the U.S.
However, a challenge in the battery industry is the high dependency on China for the import of cathode material precursors, which account for 70% of the anode material cost. About 97% of precursor imports from January to June came from China. To respond to the expansion of the IRA, the industry’s task is to reduce China’s dependence on precursors and enhance battery manufacturing efficiency by linking with North American production bases. The manufacturing and assembly proportion of battery parts in North America under the IRA is expected to expand from 50% this year to 100% by 2029.