BEIJING (Reuters) – 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) between 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.
The plant would aim to meet the battery material sourcing requirements of the U.S. IRA signed into law last August that requires automakers to source 50% of the critical minerals used in EV batteries from North America or U.S. allies by 2024, rising to 80% by the end of 2026.
“GEM hopes to stabilise 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,” the company said.
Setting up 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 was partly aimed at weaning the United States off batteries from China, which make up 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, it said, adding it was willing to adjust its shareholding to meet the IRA’s tax credit requirements.
The U.S. Treasury Department said earlier this week guidance on electric vehicle battery tax subsidies will be released next week under Biden’s climate change law.
($1 = 1,297.5000 won)
(Reporting by Ella Cao, Zhang Yan and Brenda Goh; Editing by David Goodman and Barbara Lewis)