The Korean government will provide 38 trillion won (US$29 billion) in financial support, including expanding loan limits and debt guarantees for the Korean secondary battery industry over five years. A separate bill will also be prepared to support the growth of a used battery industry ecosystem.
The Ministry of Strategy and Finance announced a plan to increase the competitiveness of the Korean secondary battery industry at an emergency economic ministerial meeting chaired by Deputy Prime Minister and Minister of Strategy and Finance Choo Kyung-ho at the Government Complex in Seoul on Dec. 13.
The measures are designed to maintain the global competitiveness of the Korean rechargeable battery industry and utilize used batteries from an industrial ecosystem perspective in the face of fierce competition among major countries to secure rechargeable battery supply chains amid the effectuation of the U.S. Inflation Reduction Act (IRA) and the European Union (EU) Core Materials Act.
The Korean government will provide more than 38 trillion won in policy finance over the next five years (2024 to 2028) for all areas of the Korean secondary battery industry, including minerals, materials, and finished products.
Specifically, to respond to the U.S. IRA, the Korean government will provide financial incentives such as expanding loan limits and reducing interest rates and insurance premiums when investing in North American facilities. In addition, 3 trillion won will be provided for the establishment of local corporations for mine development and debt guarantees for borrowings from financial institutions. It will also establish a high-tech strategic industry fund totaling 1 trillion won.
The Korean government’s plans include R&D support measures. It will promote a 117.2 billion won next-generation secondary battery technology development project from 2024 through 2028. It passed a preliminary feasibility study at the end of November and will be expedited from 2024. Including this, 73.6 billion won will be invested in R&D in 2024, a 31% increase from this year.
Moreover, a bill will be prepared next year to systematically foster the industrial ecosystem for remanufacturing, reusing, and recycling used batteries. To promote the distribution and utilization of electric vehicles loaded with recycled batteries and reused products, a battery life cycle history management system will be established. It will make it obligatory to enter information for each stage of use, such as battery users and performance evaluators through legislation.
Tax support measures are also included. A tax credit (3% of the investment and acquisition amount) for overseas resource development investments to acquire mining and exploration rights will be applied beginning from 2024. The Korean government will consider designating essential technologies for the refining and smelting of core minerals such as nickel and lithium as new growth and original technologies under the Tax Exception Limitation Act.