SK Innovation Co. has secured 800 billion won (US$658.44 million) through “green loans” for the first time in the domestic industry. Green loans refer to loans a company takes out to finance projects aimed at advancing environmental sustainability.
SK Innovation announced on Aug. 15 that it is raising green loans from banks in the United States, Europe and China where the company has regional corporations in order to build its overseas production bases for electric vehicle (EV) batteries and lithium ion battery separators (LiBS).
The funds to be secured from this month to next year will be used for SK’s investment plans across the three regions. They include EV battery plants in the United States and Hungary as well as factories in China and Poland for LiBS, a core component that divides the anode and cathode inside the EV battery. All four factories are currently under construction. SK Innovation will receive a total of 800 billion won (US$658.44 million) lending, including US$620 million (753.30 billion won) and 5 billion yuan (US$71.06 million or 86.34 billion won).
The company has decided to raise green loans to enhance the execution of its investment plans. It is the first South Korean company throughout the private and public sectors to do so. If a company obtains green loans to make an investment in sustainability-related projects, such as EV battery and LiBS, the projects can be recognized abroad for its eco-friendliness. The company can also raise funds on favorable terms.
Unlike green bonds, green lending can be provided in installments rather than in a lump sum. This allows the borrower to manage their finance and receive the loans according to the project’s progress, the firm said.
SK Innovation said it will be able to have a total battery production capacity of 40 gigawatt hours if the EV battery plant in the U.S. state of Georgia and the second plant in Komarom, Hungary, start mass production in 2022. The plant in Changzhou, China, and the first plant in Komarom to be slated for completion at the end of this year will begin mass production in the first half of next year.
For LiBS business, SK IE Technology Co., a wholly-owned material subsidiary of SK Innovation, is also planning to increase its global production capacity to 2.5 billion square meters a year and boost its market share to 30 percent by 2025 by securing new facilities in China and Poland.
In particular, SK Innovation stressed that the investment in LiBS production facilities will contribute to localization of vital materials amid the recent trade dispute between South Korea and Japan.