Key Points to Watch in President Yoon's US Visit for IRA Renegotiation

Choi Jonghyun Academy and CSIS Host Seoul Conference
"Need to Coordinate IRA Schedule and Subsidy Rates"

President Yoon Suk-yeol's state visit to the United States is expected to be a turning point in minimizing domestic corporate damages caused by the Inflation Reduction Act (IRA). With President Yoon leading the largest economic delegation ever, experts have suggested that at least the IRA regulatory schedule and subsidy rates should be renegotiated during his visit.

Professor Kang Ki-seok of the Department of Materials Science and Engineering at Seoul National University stated on the 21st at a Seoul conference held virtually by the Choi Jong-hyun Academic Foundation and the U.S. think tank Center for Strategic and International Studies (CSIS), in response to the question, "What short-term tasks related to the IRA should be discussed during President Yoon's state visit to the U.S.?" that “the ‘schedule’ is the most important issue because there is not enough time to create a situation where benefits from the IRA can be received.”

Professor Kang explained, “Currently, only 30% of electric vehicles available for purchase in the U.S. qualify for tax credits under this law. If the gradually tightened standards are applied to battery-related minerals and materials, there will be no vehicles eligible for tax credits at all.” This is because most mining and refining of essential battery minerals such as cobalt and lithium are monopolized by Chinese companies.

Out of 19 cobalt mines in the Democratic Republic of Congo, 15 are owned by China, and Chinese capital is also the largest foreign investor in nickel mining in Indonesia, the world's largest nickel producer. Among the four key battery materials, China overwhelmingly dominates production with 85% of anode materials, 66% of separators, and 62% of electrolytes.

Professor Nam Ki-tae, also from the Department of Materials Science and Engineering at Seoul National University, who was present, said, “We understand and agree with the direction of the IRA, but the schedule is crucial,” adding, “because advice from industry partners must also be considered.”

Whether to revise the subsidy rates is also a key point to watch. Dr. Fabian Villalobos of the RAND Corporation argued, “When providing subsidies related to critical mineral regions, it is necessary to distinguish between where the minerals were mined and where they were refined.” The IRA’s detailed guidelines, announced at the end of last month, stipulate that if more than 40% of critical minerals are mined or processed in the U.S. or FTA countries, a subsidy of $3,750 is granted equally for each case.

Dr. Villalobos stated, “While mining market participants are diverse, refining is monopolized by China,” and suggested, “The subsidy rate related to mining regions should be increased, while that for refining regions should be lowered.”

At the Seoul conference hosted by the Choi Jonghyun Academic Institute and the U.S. think tank Center for Strategic and International Studies (CSIS), Nam Gitae, Professor of Materials Science and Engineering at Seoul National University (far left), and Dr. Fabian Villarobos from the RAND Corporation (center) are listening to remarks by Kang Giseok, Professor of Materials Science and Engineering at Seoul National University (far right).
[Photo by Choi Jonghyun Academic Institute]

There was also a recommendation to build a new global supply chain. Professor Kang said, “In 10 to 15 years, the market and demand for critical minerals will be 100 times larger,” adding, “To reduce the risk of losing competitiveness, strategic allies?the U.S., Japan, and Korea?must establish a new supply chain.”

Professor Kang added, “Even if we start now to find resource mining regions outside China or in countries with FTAs with the U.S., it will take at least seven years to reach production. Therefore, adding countries like Indonesia, which do not yet have an FTA, to the IRA or expanding the scope from FTAs to the Indo-Pacific Economic Framework could be one possible approach.”

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