China’s GEM has teamed up with South Korean companies SK On and ECOPRO Materials to establish a new plant in South Korea. The joint venture will invest $932.56 million between 2023 and 2026 to build a factory with a capacity of at least 43,000 tonnes of nickel-based battery material each year, according to GEM.
The new plant aims to meet the sourcing requirements of the U.S. Inflation Reduction Act, signed into law in August 2022. The law requires automakers to source 50% of the critical minerals used in electric vehicle (EV) batteries from North America or U.S. allies by 2024, increasing to 80% by the end of 2026. The plant will be built in South Korea, a U.S. ally, to enable GEM to move capacity out of China and retain its dominance of mineral processing required for transitioning to a greener economy.
By stabilizing its core South Korean market and selling to the U.S. and European markets, GEM aims to achieve its vision of 500,000 tonnes of battery precursor sales by 2026. “GEM hopes to stabilize its core South Korean market, sell into the U.S. and European markets, as well as achieving its vision of 500,000 tonnes of (battery) precursor sales by 2026,” said the company.
See also: SK On Targets $2.4 Billion in New Funding Round for EV Battery Business
The U.S. Treasury Department is set to release guidance on electric vehicle battery tax subsidies next week under President Biden’s climate change law. The Inflation Reduction Act limits EV tax credits to vehicles assembled in North America and aims to reduce the United States’ dependence on batteries from China, which account for 70% of global supply.
GEM will own 49.0% or less in the joint venture, with ECOPRO and SK On holding 25.5% or above, according to GEM, which added that it was willing to adjust its shareholding to meet the IRA’s tax credit requirements.
The joint venture between GEM, SK On, and ECOPRO Materials aims to build a new plant in South Korea to meet the sourcing requirements of the U.S. Inflation Reduction Act. By moving capacity out of China and retaining its dominance of mineral processing, GEM hopes to sell to the U.S. and European markets and achieve its sales vision by 2026. The plant will also help the U.S. reduce its dependence on batteries from China, which account for 70% of global supply.
