K-Battery Highly Dependent on Chinese Imports... Hydroxide Lithium Imports Up 490%

As the sales of the three major K-battery companies increase, Chinese companies dominating the core materials market such as lithium are reaping significant profits.

In the case of lithium, a key battery material, the reliance on Chinese products is severe, with Chinese-made products accounting for nearly 90% of the market.

According to statistics from the Korea International Trade Association on the 7th, imports of lithium hydroxide, a core material for battery cathode active materials, reached $2.16 billion in the first quarter of this year, a sharp increase of 490.3% compared to the same period last year.

Annual imports of lithium hydroxide have surged from $390 million in 2019, $440 million in 2020, $670 million in 2021, to $3.68 billion in 2022.

The domestic battery industry mostly imports lithium hydroxide used in the production of high-nickel NCM (Nickel-Cobalt-Manganese) battery cathode materials. The proportion of Chinese imports of lithium hydroxide reached 88% last year.

Last year, the domestic battery industry spent $3.23 billion, approximately 4.3 trillion KRW, on importing lithium hydroxide from China. In the first quarter of this year alone, imports of Chinese lithium hydroxide amounted to $1.82 billion.

China also holds a significant share in other key battery materials such as cobalt and graphite. This is also a factor contributing to the growing trade deficit with China.

[Image source=Yonhap News]

Accordingly, the domestic battery industry is actively working to reduce dependence on China.

Globally, the importance of 'supply chain security' is increasing, and the U.S. Inflation Reduction Act (IRA), which aims to build a domestic-centered global supply chain excluding China, is also fueling this movement.

The company most actively pursuing 'lithium self-sufficiency' is POSCO. The POSCO Group acquired a salt lake in Argentina in 2018 to secure lithium resources. Starting from 2024, when the first phase plant is completed, they plan to produce and import lithium hydroxide locally in Argentina.

POSCO plans to establish an annual lithium production capacity of 300,000 tons by 2030 and aims to become one of the global 'top 3' lithium producers.

LG Energy Solution signed a business agreement with China's Yahua in April to produce lithium hydroxide in Morocco, Africa. Morocco has free trade agreements (FTA) with the U.S. and the European Union (EU), making it advantageous for meeting IRA conditions.

Kim Kyung-hoon, head of the supply chain analysis team at the Korea International Trade Association, stated, "Although the dependence on Chinese imports of lithium hydroxide is very high, this situation is unlikely to continue," adding, "This is because domestic companies have made timely investments in response to the IRA environment."

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