Korean Battery Producers' Concerns Mounting
An increasing number of countries are enacting laws against China’s raw material supply chain domination. The examples include the U.S. Inflation Reduction Act recently signed into law and the Raw Materials Act in the making in Europe. Under the circumstances, South Korean electric vehicle (EV) battery manufacturers’ concerns are mounting due to their high reliance on Chinese raw materials.
On the manufacturers’ part, the U.S. and European laws can be a boon in that those are disadvantageous for Chinese EV battery suppliers such as CATL and BYD. However, at the same time, the laws are the manufacturers’ burden in that they are required to find alternative raw material suppliers, which will not be easy. At present, the manufacturers’ dependence on supply from China amounts to 84.4 percent, 81 percent and 89.6 percent when it comes to lithium hydroxide, cobalt and graphite, respectively.
The manufacturers are waiting for details of the acts to come out. They may not be seriously affected by the acts if the acts focus on the place of production instead of the place of smelting. According to the International Energy Agency, China accounts for 57.6 percent of global lithium smelting and the ratio is 35.3 percent and 64.6 percent in the case of nickel and cobalt, and yet most of the minerals are imported from Australia, Indonesia, Congo, and so on and its production ratios stand at 14.1 percent, 4.1 percent and 2.9 percent, respectively.
As for graphite, the manufacturers are capable of reducing their reliance by anode material diversification and artificial graphite production. For example, POSCO Chemical has its own artificial graphite production techniques and is planning to double its related production facilities from 8,000 tons a year.