The move came amid the passage of US Inflation Reduction Act and rising EV demands
Amid the rising global demand for electric vehicles and the U.S.’s passage of the Inflation Reduction Act, many South Korean companies have entered the U.S. battery recycling market. And those that rely heavily on China for key minerals are diversifying their supply chains, and one of their solutions is reusing waste batteries.
The Inflation Reduction Act (IRA) introduced in August stipulates that electric vehicles (EV) must contain a battery built with minerals mined or recycled in North America in order to qualify for the federal tax credit. And that, by 2024, at least 50 percent of EV batteries must come from the United States, Canada, or Mexico, with that figure rising to 100 percent by 2028.
These rules are believed to be aimed at curbing China’s electric vehicle supply chain. According to the International Energy Agency (IEA), Chinese companies currently hold more than half of the processing and refining capacity of lithium, cobalt, and graphite—critical components for EV batteries.
As a result, South Korean companies entering the U.S. EV market must significantly reduce their dependence on Chinese battery-related minerals.
However, data shows the South Korean battery industry has about 80 to 90 percent reliance on key minerals from China, and that dependence has continued to rise.
Statistics released by the Korea International Trade Association (KITA) on Aug. 22 showed that in 2018, South Korea’s imports of lithium hydroxide from China were 64.9 percent. But that number has increased to 84.4 percent from January to July this year.
In the same timeframe, the country’s imports of cobalt from China increased from 53.1 percent to 81 percent, while its Chinese graphite imports increased from 83.7 percent to 89.6 percent.
Lithium batteries used in electric vehicles have high energy density. Although the battery capacity and performance decrease after charge cycles, its core raw materials, such as nickel and lithium, can be extracted and reused. Therefore, the rules stipulated by the Inflation Reduction Act have prompted companies to enter the “waste battery recycling” market, causing it to expand.
According to a forecast released on Sept. 12 by SNE Research, a South Korean market research company on the energy industry and applications, the size of the global EV battery recycling market will grow from $300 million in 2020 to $2 billion in 2025, with an average annual growth rate of 47 percent.
It added that the market size is projected to reach $60 billion by 2040.
A worker with car batteries at a factory for Xinwangda Electric Vehicle Battery Co. Ltd, which makes lithium batteries for electric cars and other uses, in Nanjing in China’s eastern Jiangsu Province, on March 12, 2021. (STR/AFP via Getty Images)
On top of battery manufacturers, South Korean energy, chemical, and even construction companies have entered the used battery business in the United States.
In late August, SK ecoplant, a construction engineering company under the South Korean conglomerate SK Group, acquired a $50 million stake in Ascend Elements, a U.S.-based EV battery recycling and engineered materials company, becoming its largest shareholder.
SK On, a battery maker under the SK Group, unveiled plans to recycle used batteries from Blue Oval SK, its battery park joint venture with Ford, with the help of Redwood Materials, a U.S.-based battery recycling company.
In addition, South Korea’s largest battery recycling company, Sungil Hitech, announced in August that it would set up a battery recycling facility in Georgia. The company reportedly has the technology to recover more than 95 percent of the nickel, cobalt, lithium, and other metals from expired batteries. It currently has facilities in South Korea, China, Malaysia, India, Hungary, and other regions.
At the end of last year, LG Energy Solutions, in a joint venture with LG Chem, both subsidiaries of LG Group, invested about $50 million in Li-Cycle, the largest lithium battery recycling company in North America, securing a 2.6 percent stake.
LG Energy Solutions aims to extract 20,000 tons of nickel from waste batteries through the battery recycling business over ten years.