[Asia Exclusive] Jeong Sun-nam, Executive Vice President of Korea Battery Industry Association: "Battery materials 90% dependent on China, issues if supply chain is reorganized"

"Battery Materials 80~90% Dependent on China"
No Short-Term Issues... Impact if Supply Chain Restructured
"Government Supports Next-Generation Batteries... Companies Should Focus on Developing Lithium-Ion Performance"

[Asia Economy Interview = Eunjeong Lee, Head of Industry Department, Summary = Yoonju Hwang] "Our country depends on China for 80-90% of battery materials, making the supply chain vulnerable. However, it is not realistic to produce all items domestically or diversify all sources. We need to first identify the most vulnerable items and then develop response strategies."

Jeong Soon-nam, Executive Vice President of the Korea Battery Industry Association, said in an interview with Asia Economy on the 15th, "There will be no immediate problems, but in the long term, if the US-China trade supply chain is reorganized and major battery raw materials cannot be procured from China, issues may arise."

Recently, the global supply chain restructuring has become a major issue, and Korea is also directly affected. The worldwide shutdown caused by COVID-19 created cracks in the global supply chain, and political and diplomatic issues such as the US-China trade dispute are also impacting it. Representative cases include Japan's export restrictions on materials, parts, and equipment in 2019, the semiconductor shortage, the urea water shortage, and SK Hynix's conflict over the introduction of extreme ultraviolet (EUV) lithography equipment. The battery sector is also not safe. Korea's dependence on foreign countries such as China for raw materials and material production is high. The dependence on China for key battery materials like lithium and graphite is 92% and 87.7%, respectively. To make matters worse, dependence on cobalt hydroxide increased from 52.4% in 2018 to 88.5% last year, and cobalt sulfate from 49.6% to 81.5%. Although there are no short-term problems, it is pointed out that preparations should be made for China's export restrictions from a long-term perspective.

- There are concerns that a second China-origin urea water crisis could recur in the battery sector.

△ During Japan's export restrictions, an investigation was conducted under the Machinery Industry Promotion Association, and after the recent urea water crisis, a full survey of the battery supply chain is underway again. If companies report changes to the association, the current status will be reported to the government. Fortunately, since there are not many electric vehicle battery production facilities domestically, the direct impact is expected to be minimal. Over 70% of domestic battery companies' production facilities are located in China, the US, and Europe. Even if China enforces material export restrictions, the damage to our companies' production facilities in China is expected to be relatively small. The US and Europe can utilize channels in South America or Africa in crisis situations.

- What is the situation in competing countries?

△ China had many battery companies due to government subsidy policies, but recently, after restructuring, the number is decreasing. Japan's Panasonic is experiencing a slowdown. Its global market share peaked at 16.3% in the first half of this year, then declined to 14.3% (cumulative) in July and 13.3% (cumulative) in September. Europe is attempting battery internalization by establishing Northvolt.

- Not only Europe but also US and Japanese automakers are pursuing internalization.

△ Automakers find it difficult to catch up with the technological capabilities of Korea's top three battery companies: LG Energy Solution, SK On, and Samsung SDI. Producing batteries in small quantities is easy, but mass-producing them with consistent quality is difficult. For example, Tesla uses about 7,000 cylindrical batteries per vehicle. The technology lies in producing millions of batteries uniformly in factories, which automakers are unlikely to achieve in the short term. Considering supply chain issues, they may internalize about 10%, but 100% is difficult. Therefore, the lithium-ion battery internalization that automakers talk about now can be interpreted as establishing joint ventures like Northvolt. However, automakers have a strong will to lead next-generation batteries such as solid-state batteries. Competition between automakers and battery companies over next-generation batteries is expected to intensify.

- When does the industry expect next-generation batteries to be commercialized?

△ Toyota has announced plans to accelerate, but generally, 2030 is the target. In the US, QuantumScape has entered the prototype stage for solid-state batteries, but mass production is another matter. Personally, I think mass production in the latter half of the 2020s will be difficult.

- One ongoing issue companies raise is the 'labor shortage.' What support is provided by the government and the association?

△ According to the association's survey, as of 2020, there is a shortage of 1,013 master's and doctoral-level personnel in the battery sector domestically. Since 2020, the Battery Industry Association, along with Hanyang University, Sungkyunkwan University, Chungnam National University, Chonnam National University, and UNIST, has been conducting a specialized workforce training project for the secondary battery industry, producing over 50 master's and doctoral-level experts annually. This will increase to 150 per year starting in 2022. Additionally, a project for training experts in used secondary batteries has been newly established, aiming to produce 50 experts annually. To build the overall secondary battery infrastructure lacking nationwide, a 'Secondary Battery Manufacturing Process Workforce Training Platform (tentative name)' has been under development since 2022. The Battery Industry Association established the Secondary Battery Human Resources Development Council (SC) this year to monitor workforce supply and demand across the industry and develop mid- to long-term workforce training plans.

- Electric vehicle batteries are closely related to automobiles. Has the association increased exchanges with forward industries such as the Automobile Association?

△ Yes. Since last year, the association has been active as an operating committee member in the Industry Development Forum hosted by the Korea Automobile Manufacturers Association. Through these activities, we aim to raise public awareness of the battery and automobile industries, present industry status and vision, and discover policy alternatives and proposals.

This content was produced with the assistance of AI translation services.