China's GEM to set up battery plant in South Korea

BEIJING China's GEM Co Ltd, a battery and material recycler, has signed a joint venture agreement with SK On and ECOPRO Materials to set up a plant in South Korea to meet the conditions of the U.S. Inflation Reduction Act IRA it said on Friday.

The joint venture would aim to invest about 1.21 trillion won $932.56 million over 2023 and 2026 to build a factory with a minimum capacity of 43,000 tonnes of nickel-based battery material annually, GEM said in a Shenzhen filing.

By 2024, the plant would aim to meet the battery material sourcing requirements of the U.S. IRA, which requires automakers to source 50 per cent of the critical minerals in EV batteries from North America or U.S. allies, and will increase to 80 per cent by the end of 2026.

GEM hopes to stabilse its core South Korean market, sell into the U.S. and European markets, as well as achieve its vision of 500,000 tons of battery precursor sales by 2026, the company said.

A joint venture in South Korea, a U.S. ally, would allow GEM to move capacity out of China and help the country to retain its dominance of mineral processing needed for the tradition to a greener economy.

The IRA law limits EV tax credits to vehicles assembled in North America and aims to wean the United States off batteries from China, which make up 70 per cent of global supply.

With ECOPRO and SK On holding 25.5 per cent or above, GEM will have 49.0 percent or less in the joint venture, and it is willing to adjust its shareholding to meet the IRA's tax credit requirements.

Under Biden's climate change law, the U.S. Treasury Department said earlier this week that electric vehicle battery tax subsidies will be released next week.