South Korea holds the potential to become a global battery supply base, necessitating a national strategy to realize this potential, according to claims made by industry experts. The Korea Chamber of Commerce and Industry’s Sustainability Growth Initiative (SGI) highlighted in its report on Feb. 22, “The Possibility of Establishing a Global Battery Supply Chain Hub in Korea,” that major countries outside of Korea, such as the United States and the European Union, are implementing policies to reduce their dependence on China for global battery supply chains. It noted that a favorable environment is being formed for South Korea to replace China as a supply chain hub.
Currently, China dominates significant portions of the global battery supply chain, including mineral mining, refining, and battery cell production. South Korea’s reliance on China for imports of the five key battery minerals -- lithium, nickel, cobalt, manganese, and graphite -- is notably high.
The report anticipates that although the global battery supply chain is currently centered around China, South Korea has the potential to replace China as a hub for the supply chain. South Korea’s significant position in supplying cathode materials, essential components of cells, is seen as a positive factor for establishing a battery hub. Additionally, South Korea possesses global companies within the battery cell sector.
While China provides a substantial portion of essential mineral resources, actual reserves of these minerals are dispersed across countries other than China, mitigating the risk associated with China. For example, Congo holds a major share of cobalt, Indonesia is rich in nickel, and Australia has the largest reserves of lithium.
However, according to SGI’s analysis, South Korea’s position within the battery supply chain is considerably lower than its share in the export market. SGI compared and analyzed the supply chain positions of countries using a network analysis method and a metric called “betweenness centrality,” which measures the intermediary role within the supply chain.
The analysis found that in the case of lithium-ion batteries, the most widely used type of battery, countries like the United States, Germany, France, and the Netherlands have high betweenness centrality, indicating a prominent position in the supply chain. Despite being the first and third-largest exporters globally, China and South Korea’s betweenness centrality ranks are lower than their export rankings, at seventh and twenty-first, respectively, indicating their lower status in the supply chain compared to their export volumes.
In the case of ternary cathode materials, which South Korea exports the most, the country’s betweenness centrality ranks seventh globally, indicating a lower position in the supply chain relative to its export volume. Kim Kyung-hoon, a researcher at SGI, commented, “South Korea’s lower position in the supply chain is due to its exports being concentrated in a few countries, as opposed to China, the United States, Germany, and France, which have a more diverse range of trading partners.”