Korea-China battery minerals tie-up mutually beneficial: CNGR chief

China and South Korea stand to mutually benefit by strengthening their partnership in the battery materials business amid tougher US regulations on batteries, related raw materials and electric vehicles, a Chinese battery industry veteran said.

Weiming Deng, founder and chairman of China’s CNGR Advanced Material Co., the world’s top lithium-ion battery precursor maker, said his company plans to enhance its presence in Korea through joint venture projects.

“Korea has strengths in cathode materials while China has strengths in precursors. Closer cooperation between the two countries is a win-win,” Deng said in an interview with The Korea Economic Daily on Monday.

Established in 1992, CNGR runs four battery materials factories in China, including its main plant in Tongren, a city in eastern Guizhou Province.

With 2022 sales revenue of 3.8 trillion won ($2.9 billion), CNGR controls a quarter of the world’s precursor market.

A precursor is a material created by mixing nickel, cobalt and manganese, and is added to lithium to make cathodes, which make up the positive end of a lithium-ion battery.

CNGR set up a Korean office in September 2014 and currently has business dealings with almost all Korean cathode makers.

JV WITH POSCO

Last month, CNGR signed a 1.5 trillion won deal with POSCO Holdings Inc. to establish two joint ventures in Korea for the production of electric vehicle battery materials.

Under the deal, POSCO Holdings will launch a 6:4 nickel refining JV with CNGR to produce 50,000 tons of nickel sulfate annually.

Separately, POSCO Future M Co., the group’s battery ingredients manufacturer, will establish a 2:8 JV with the Chinese company to produce 110,000 tons of precursors annually for use at POSCO Future M’s high-nickel cathode factory under construction.

Construction of the two JVs will begin in the fourth quarter with an aim to start commercial production in 2026. The amount produced will be enough for 1.2 million EVs, according to POSCO.

Through the partnership, POSCO hopes to stably procure precursors, which account for up to 70% of cathode production costs.

“We have so far focused on product sales and customer services in Korea. But with the POSCO deal, we are now part of the battery production ecosystem in Korea,” said Deng.

STRATEGIC INVESTMENT IN KOREA

He said the deal with POSCO was CNGR’s “bold and strategic” decision reached after extensive discussions with the Korean government and its partners.

“Korea’s regulations are different from China’s laws, which posed challenges for us to reach a deal with POSCO. But I believe we can work out all issues with our Korean partners in future business as well,” he said.

POSCO Group and CNGR are likely to benefit from the cooperation as the US government requires that 50% of the value of battery components be produced or assembled in North America to qualify for an EV tax credit. It also requires that 40% of the value of critical minerals be sourced from the US or one of its free trade partners, such as South Korea, for the incentive.

CNGR picked Indonesia, the world’s largest nickel producer, as its first overseas production base, followed by its second base in Finland, a key nickel-producing country in Europe. Korea is CNGR’s third overseas production base.

“Korean companies’ globalization is faster than their Chinese counterparts. But with our companies aggressively going abroad, the gap will be narrowed quickly,” he said.

Write to Mi-Sun Kang at misunny@hankyung.com

In-Soo Nam edited this article.