What’s new: Chinese battery material supplier Ningbo Ronbay New Energy Technology Co. Ltd. won approval to more than triple its South Korean production capacity amid a rising tide of Chinese companies seeking foothold in the neighboring country.
Ningbo Ronbay got a green light to expand capacity for producing cathode materials and precursors used in electric car batteries to 80,000 tons a year in Saemangeum, the Shanghai-traded company said Monday without disclosing financial details.
Ningbo Ronbay currently runs a facility in South Korea’s Saemangeum National Industrial Complex with a capacity to produce 20,000 tons of cathode materials a year and 6,000 tons of precursors.
The capacity expansion will allow the company to better leverage South Korea’s favorable trade agreements to access markets in Europe and the U.S., Ningbo Ronbay said.
The context: A growing number of Chinese battery material suppliers are seeking to set up operations in South Korea, counting on the East Asian country’s trade partnership with the U.S. to benefit their businesses overseas.
Such South Korea facilities will allow companies like Ningbo Ronbay to enjoy zero tariffs on its exports to Europe and the U.S.
The Inflation Reduction Act signed by U.S. President Joe Biden last August stipulates that to qualify for government subsidies, new-energy vehicles put into use in 2023 must ensure that 40% of the raw materials in their batteries are mined or processed in the U.S. or in countries that have free-trade agreements with the U.S.
In May, Chinese mining company Zhejiang Huayou Cobalt Co. reached a partnership with South Korea’s top chemicals company, LG Chem Ltd., to launch a $923 million joint venture to manufacture battery material precursors. In March, metal recycling service provider GEM Co. Ltd. signed a joint venture agreement with SK On to set up a plant in South Korea to meet the conditions of the American law.
Chinese companies processing materials in Korea meet local battery demand and gain export flexibility to Europe and America by labeling products as Korean-origin, said Xu Aidong, chief analyst at Antaike.
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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