A Global Race Is On to Secure Battery Raw Materials
Cooperation between Korean battery cell makers and U.S. producers of battery raw materials can bring about win-win effects, analysts say.
According to the U.S. Geological Survey, the United States ranks fourth in lithium reserves after Bolivia, Argentina and Chile. Lithium mining is in full swing as the Joe Biden administration recently implemented a policy to increase mineral production. The U.S. Department of Energy is pushing for a plan to provide US$3 billion (about 3.7 trillion won) to U.S. refiners of such battery raw materials as lithium, cobalt, nickel, and graphite.
Korea-U.S. cooperation in battery materials is significant in that the two nations can reduce reliance on a Chinese battery supply chain. Seventy percent of the world’s cobalt production comes from the Democratic Republic of Congo in Africa. Chinese capital owns 70 percent of the cobalt mines in the African nation. Lithium is also mined in Australia and Chile, but processing takes place mainly in China. More than 60 percent of the lithium distributed worldwide is processed and supplied by China.
Moreover, the possibility of a lithium shortage crisis cannot be ruled out. According to the Korea Mineral Resource Information Service (KOMIS), lithium prices soared nearly 300 percent from the average in the previous year.
As a global race to secure raw materials for batteries is heating up, the Korean battery industry is also expanding investment in raw materials. LG Energy Solution has formed a consortium with POSCO and LG Chem to build a battery value chain in Indonesia. Their idea is to build a complete value chain from mineral development to battery cell production in partnership with a state-run company in Indonesia. Indonesia ranks first in both reserves and mining of nickel, a key material for batteries. The consortium plans to invest 11 trillion won in this project.
SK On is also considering investment in mines. “We are considering making direct investment in nickel and cobalt mines in the long term,” said Kim Jun, vice chairman of SK Innovation, the parent company of SK On, in March.