Looking into the Secondary Battery Supply Chain... 'Korea Had Reasons for Falling Behind China'

South Korea's Dependence on Imports for Secondary Battery Raw Materials and Components Increases
China Leads Electric Vehicle Battery Market with Aggressive Policies
"Government Support Essential for Overseas Resource Development and Other Policies"

[Asia Economy Reporter Kim Pyeonghwa] As secondary batteries gain attention as an eco-friendly future industry, it has been revealed that the supply chain competitiveness of the domestic secondary battery industry is low. With a high dependence on imports of key raw mineral materials, competition among major countries such as China has intensified. There is an urgent need to expand policy support, including the creation of an overseas resource development ecosystem for the secondary battery industry.

On the 15th, the Federation of Korean Industries announced this based on the report "Diagnosis of the Secondary Battery Supply Chain in Korea and China and Policy Recommendations," commissioned to Kim Yujeong, Head of the Mineral Resource Strategy Research Center at the Korea Institute of Geoscience and Mineral Resources.

China Leads Electric Vehicle Battery Market... Focused on Secondary Battery Raw Materials and Component Parts

According to the report, Korea ranks second in the global market share for electric vehicle batteries as of last year, demonstrating excellent manufacturing competitiveness in secondary battery finished products. However, the global market share for the four major secondary battery material components?cathode, anode, electrolyte, and separator?is low, and there is a high dependence on imports.

In particular, most of the supply of secondary battery raw materials depends on imports. There is no domestic production of lithium, cobalt, or nickel, and processed products refined and smelted are imported from countries such as China. Dependence on China is gradually increasing, making the domestic secondary battery and electric vehicle industries inevitably affected by changes in Chinese policies or logistics conditions. Since the supply chain from raw materials to material components is not established, it is vulnerable to external changes such as raw material regulations and market price volatility.

The battery recycling sector is also a concern. According to the Ministry of Environment, the number of electric vehicle waste batteries is expected to increase significantly from 2025, but domestic systems for waste battery recycling or specific disposal guidelines are still insufficient. Although laws such as the Automobile Management Act, which manages the entire life cycle history of electric vehicle batteries as public databases, are being revised, it is expected to take time to establish a systematic framework.

On the other hand, China is the world’s number one producer in the four major material component fields. It holds an overwhelming market share in the production of lithium hydroxide, cobalt sulfate, and other materials used in secondary battery components. China has high accessibility and procurement competitiveness for raw materials. This is the result of actively promoting overseas resource development based on policy support. Aggressive investments at the individual company level, such as by CATL and BYD, have continued, maintaining its position as the top player in the global electric vehicle battery market.

China also shows strengths in the waste battery recycling sector. Since 2016, China has been promoting waste battery recycling, and as of the first half of this year, it has about 40,000 companies specializing in electric vehicle battery recycling. Since 2017, it has operated a national platform managing information on the production, collection, and recycling of secondary batteries, actively implementing policies.

Comparison Chart of Battery Recycling between Korea and China

"Need to Establish an Information Platform to Strengthen Secondary Battery Supply Chain Competitiveness"

The domestic battery industry is attempting to invest in overseas resource development projects to secure stable raw mineral supplies, but is facing difficulties due to lack of experience and know-how. There is a growing consensus that domestic policy support such as expanding technical, legal, and financial advisory organizations for domestic companies, operating overseas resource development funds, and linking resource development with government development assistance (ODA) is necessary.

The report pointed out that to strengthen the competitiveness of the domestic secondary battery supply chain, the government must establish an information platform. It explained that overseas cases such as Germany’s 'Battery Pass' project, where a consortium of 11 companies including BMW and BASF has started designing and developing a platform system, and Japan’s 'Battery Supply Chain Digital Platform' should be referenced. Additionally, it recommended establishing a system to build an ecosystem for the waste battery recycling market.

Yoo Hwan-ik, Head of the Industrial Headquarters at the Federation of Korean Industries, said, "Secondary batteries are a future industry called the second semiconductor, but our companies face many difficulties due to the weaponization of resources and excessive supply chain dependence on specific countries. Korea’s overall supply chain competitiveness is lower compared to China, especially in securing raw materials and waste battery recycling. Therefore, active policy support focusing on overseas resource development and the recycling industry is necessary."

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