In order to comply with the requirements of the U.S. Inflation Reduction Act (IRA), China's GEM Co Ltd, a battery and material recycler, has inked a joint venture agreement with SK On and ECOPRO Materials to establish a plant in South Korea, it said.
According to a Shenzhen filing by GEM, the joint venture would like to invest roughly 1.21 trillion won ($932.56 million) between 2023 and 2026 to construct a factory with a minimum annual capacity of 43,000 tonnes of nickel-based battery material.
The facility would strive to comply with the U.S. IRA's battery material sourcing rules, which mandate that automakers obtain 50% of the essential minerals used in EV batteries from North America or U.S. allies by 2024 and increase that percentage to 80% by the end of 2026.
"GEM hopes to stabilise its core South Korean market, sell into the U.S. and European markets, as well as achieving its vision of 500,000 tonnes of (battery) precursor sales by 2026," the company said.
GEM might move capacity out of China and assist the nation in maintaining its supremacy of the mineral processing necessary for the transition to a greener economy by establishing a joint venture in South Korea, a U.S. ally.
The IRA rule restricts EV tax credits to vehicles made in North America and was created in part to wean the United States off of Chinese batteries, which account for 70% of the world's supply.
According to the statement, GEM will have 49.5 or less of the joint venture, with ECOPRO and SK On each owning 25.5% or more. It also stated that it was open to change its shareholding to satisfy the IRA's tax credit requirements.
The U.S. Treasury Department announced last week that instructions on Biden's climate change law's battery tax subsidies would be made public the next week.