SK on Co. logo [Courtesy of SK on]
South Korean battery maker SK on Co. has agreed to set up a joint venture with two battery component partners to build a precursor manufacturing plant in an industrial complex on the country’s southwest coast.
SK on Thursday signed a memorandum of understanding with EcoPro Materials Co. and China’s Green Eco-Manufacture (GEM) in Seoul to establish a joint venture company, GEM Korea New Energy Materials.
The three companies together will invest up to 1.21 trillion won ($950 million) to build the precursor plants in Saemangeum National Industrial Complex with an annual production capacity of 100,000 tons. Construction will begin in June, with the first factory to begin operations in 2025 and the second one in 2027. The new plants are expected to create over 1,100 jobs.
A precursor is a compound of nickel, cobalt, manganese and other materials before it is turned into cathodes, a key material that determines the power and range of electric-vehicle batteries.
A precursor represents more than 65 percent to 70 percent of the cost of cathodes. With 100,000 tons of precursors, it is possible to produce cathodes for batteries that power over 600,000 EVs based on 105 kilowatt hour per vehicle.
Precursors that will come from Saemangeum will use nickel intermediary products or mixed hydroxide precipitates (MHPs) from their separate joint venture company in Indonesia. The three companies signed an agreement to establish an MHP production company in November, with plans to produce approximately 30,000 tons of pure nickel equivalent MHP annually from the third quarter of 2024.
The three-party venture is seen as a strategic move to reduce their dependence on China for precursor production and strengthen their global supply chain. According to data from Korea International Trade Association, China accounted for 95.3 percent in precursor production last year.
Precursors from the Saemangeum plant are expected to be supplied to EcoPro BM Co., affiliated with EcoPro Materials, to be made into cathode materials and then delivered to SK on.
Most of the precursors to be produced at Saemangeum will be exported to North American cathode production plants of domestic companies. Although SK on imports MHPs from Indonesia, which has not signed a Free Trade Agreement with the U.S., SK on anticipates it will benefit from the Inflation Reduction Act subsidy program for battery materials made with imported MHPs from Indonesia. The IRA provides subsidies for materials mined and processed in North America or FTA partners of the U.S.
By Jung You-jung and Minu Kim
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