South Korea to offer $5.3 billion in funding to support battery investment in North America

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By Heekyong Yang

SEOUL (RockedBuzz via Reuters) – South Korea said on Friday it would provide 7 trillion won ($5.32 billion) in financial support to its battery makers seeking to invest in infrastructure in North America over the next five years to help companies to meet the U.S. Inflation Reduction Act.

The government’s support will include lowering loan rates and insurance premiums by up to 20%, as well as providing more loans and tax credits for Korean companies’ battery and materials manufacturing plants in the region, the ministry said. of the Industry.

The US Treasury Department last week unveiled tougher tax rules for electric vehicles (EVs), requiring automakers to source a certain percentage of critical minerals for EV batteries from the US or a partner free trade agreement to qualify for new US federal incentives under the Inflation Reduction Act.

The act requires 50% of the value of battery components to be manufactured or assembled in North America to qualify for a $3,750 credit, and 40% of the value of critical minerals to be sourced from the United States or a free-trade partner as well. for a credit of $3,750.

“Both the government and businessmen should cooperate to find solutions together to effectively cope with rapidly changing situations after the Inflation Reduction Act,” Commerce Minister Lee Chang-yang said as he chaired a meeting with key battery cell manufacturers and material companies.

In November, South Korea launched the government-backed Battery Alliance to better source key metals dominated by China to strengthen battery supply chain stability.

LG Energy Solution Ltd (LGES), Samsung SDI Co Ltd and South Korea’s SK On comprise three of the world’s top five electric vehicle battery cell makers, controlling more than a quarter of the global market and supplying the likes of Tesla Inc, Volkswagen AG and General Motors Co.

In March, LGES said it would resume a stalled U.S. battery project with a $5.6 billion investment in Arizona to qualify for federal incentives under the Inflation Reduction Act.

($1 = 1,316.2200 won)

(Reporting by Heekyong Yang; Editing by Christopher Cushing)

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