Korea Ranks 6th Globally in Battery Supply Chain... "Raw Material Vulnerability... Urgent Strengthening Needed"

The Lithium-Ion Supply Chain Raw Materials Sector Ranks Only 17th

[Asia Economy Reporter Oh Hyung-gil] Domestic battery and material companies are focusing not only on production facilities but also on securing raw materials; however, South Korea's battery supply chain competitiveness remains insufficient.

It has been pointed out that analyzing the battery supply chain's SWOT (Strengths, Weaknesses, Opportunities, Threats) is necessary to devise alternatives and solutions to overcome vulnerabilities.

On the 2nd, energy research firm BloombergNEF announced the 2022 global lithium-ion battery supply chain rankings, where South Korea ranked 6th overall alongside Germany.

South Korea ranked 2nd globally in battery production but was 17th in raw materials and 10th in ESG (Environmental, Social, Governance). Nevertheless, it improved its ranking by placing 5th and 6th in battery demand and innovation & infrastructure sectors, respectively.

The country with the most robust battery supply chain worldwide was China. China ranked 1st in raw materials, battery production, and demand sectors, securing the top overall position. BloombergNEF noted, "China currently accounts for 75% of global battery cell manufacturing and 90% of cathode and electrolyte production," calling it "the world's leading battery metals refining country."

Following China, Canada ranked 2nd, with the United States, Finland, and Norway trailing behind. The U.S., aiming to strengthen its battery supply chain through the Inflation Reduction Act (IRA), received a low evaluation in battery production (15th place).

Japan ranked 3rd in battery production and 9th overall. Notably, the three Asian countries?South Korea, China, and Japan?occupied the top three spots in global battery production, underscoring the high dependence on these three nations in global battery manufacturing.

The survey results indicate that South Korea urgently needs to secure raw materials to strengthen its battery supply chain. China ranked 1st in the raw materials sector, followed by resource-rich countries Australia, Canada, Brazil, and Indonesia.

The U.S. is about to implement the IRA. South Korea urgently needs to decouple from China and establish an independent raw material supply chain. Especially, the European Union (EU) is also pushing for the introduction of the Critical Raw Materials Act (CRMA) to reduce dependence on Chinese raw materials. Recently, Goldman Sachs forecasted that the U.S. and Europe will sever their dependence on Chinese batteries by 2030.

There are calls to relocate the domestic supply chain, which currently depends on China, either domestically or to third countries. Japan has already begun moving production bases to third countries or back to Japan to reduce dependence on Chinese supply chains. Honda is reviewing whether it can produce passenger cars and motorcycles without Chinese parts and is considering relocating major production bases to Southeast Asia, India, and North America.

A battery industry official said, "A stable supply chain that is not influenced by external risks is urgently needed," adding, "Our companies should also refer to the Japanese government and companies' responses to reduce dependence on China and strive for supply chain diversification through procurement diversification, reshoring, and localization."

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