South Korea Unveils Ambitious $29 Billion Plan to Boost Battery Industry

South Korea, in a bid to fortify its position in the fiercely competitive global battery market, has announced a substantial financial infusion of 38 trillion won ($29 billion) over the next five years, according to a government statement released on Wednesday.

As of 2022, South Korean battery giants, including LG Energy Solution, Samsung SDI, and SK On (a subsidiary of SK Innovation), collectively held a formidable 49% share of the global battery market, excluding China.

However, concerns about overdependence on foreign sources for essential materials have prompted the government to prioritize diversification strategies.

To achieve this, South Korea plans to introduce tax incentives and loan support for domestic companies venturing abroad to secure mining rights for crucial minerals used in battery production.

Additionally, financial backing for firms involved in mineral refinement and recycling will be strengthened.

The initiative also includes plans to augment financial support, such as loans, guarantees, and insurance, from institutions like the Export-Import Bank of Korea for battery industry firms.

This extended support is intended not only for domestic ventures but also for those investing in North America to comply with the requirements for tax allowances under the U.S. Inflation Reduction Act (IRA).

Despite a slowdown in electric vehicle sales and cautious forecasts for 2024, attributed in part to increased auto financing costs, the announced measures aim to bolster South Korea's secondary battery industry and enhance its global competitiveness over the long term, according to the official statement.

Joyce Lee / Reuters