SK On, EcoPro, China’s GEM to jointly build precursor factory

South Korea’s electric vehicle (EV) battery major SK On Co. will build a precursor plant at home with a Korean partner, EcoPro Co., and China's GEM Co., as part of efforts to meet US Inflation Reduction Act (IRA) requirements for federal tax incentives.

They will build the plant in Saemangeum, a reclaimed area on Korea’s southwest coast, to produce precursors, a core material that accounts for some 70% of a cathode's raw material cost.

Precursors are added to lithium to make cathodes, the positive end of a lithium-ion battery.

The new joint factory is expected to churn out 50,000 tons of precursors per year — enough to make about 300,000 EVs annually.

After breaking ground this year, the three partners aim to complete the factory’s construction by 2024 at an estimated cost of 1.2 trillion won ($934.9 million).

The latest partnership is the trio's second collaboration on producing battery materials.

Last November, they agreed to jointly build a factory in Indonesia to produce mixed nickel-cobalt hydroxide precipitate (MHP), in an amount equivalent to 30,000 tons of pure nickel annually, starting in 2024. That amount is enough to produce 42 gigawatts (GWh) of batteries for about 600,000 EVs.

The new factory in Korea will produce precursors by mixing cobalt and manganese, while the intermediate material MHP will be shipped from Indonesia.

EcoPro will make cathodes with precursors from the Korean factory and supply them to SK On’s battery factories around the world.

This marks the latest effort by SK On to meet the requirements of the US IRA, which gives tax incentives for making EV batteries with minerals and components produced in the US or in countries with which the US has a free trade agreement. The US-Korea free trade pact took effect in March 2012.

The Korean EV battery maker — the world’s fifth largest —broke ground last December on two battery plants for BlueOval SK, a 50:50 joint venture with Ford Motor Co., in Glendale, Kentucky, that will be eligible for US tax incentives under the IRA.

SK On, EcoPro and GEM are scheduled to sign an agreement for the joint precursor factory partnership on Friday.

Write to Hyung-Kyu Kim at khk@hankyung.com
Sookyung Seo edited this article.