[Redirecting the Flow of Capital]①[Report] Overcoming the "Death Valley" with the National Growth Fund... Inside the Mass Production Base for All-Solid-State Batteries

'KRW 10 Billion from National Growth Fund'
Isu Nears Completion of Lithium Sulfide Mass Production Plant in June
Production Capacity to Expand from 40 to 500 Tons Annually...
Establishing a Supply Chain for All-Solid-State Battery Materials

Editor's Note
The Lee Jaemyung administration has declared a major shift toward "productive finance." The main goal is to redirect capital that has been concentrated in real estate into advanced and strategic industries. As global technological supremacy competition expands into a "capital war," countries such as the United States, China, Japan, and Europe are combining state capital with private finance to inject astronomical sums into strategic sectors. In contrast, there is sharp criticism that Korean finance remains stuck in a conservative structure centered on real estate-backed lending. There are also growing concerns that continued distortions in resource allocation could lead to Korea falling behind in the technology race. In response, the government has launched the "National Growth Fund," a 150 trillion won initiative that combines policy finance with private capital to begin the transformation of the financial structure. This article examines the necessity of productive finance, the limitations of private finance, and the policy tasks that lie ahead.

On the afternoon of April 20, at the Isu Specialty Chemical factory in Onsan-eup, Ulju-gun, Ulsan, after passing through the factory entrance and moving further inside, four buildings, each approximately 20 meters tall, appeared on a large site filled with the acrid smell of sulfur. Inside the factory, thick pipes were tangled like a spider web, and workers were busily connecting pipelines. The site was enveloped in the unique sense of tension typical of a chemical plant nearing completion. Here, an additional production facility for lithium sulfide—a key raw material for solid-state batteries, which are regarded as game changers in the future battery market for electric vehicles and robotics—was under construction. Final work was underway, with the goal of completing the plant in June and beginning operations in the second half of the year.

Test production was already underway at the demonstration plant next to the mother plant. Currently, the company produces 40 tons of lithium sulfide annually. Once the mother plant is completed in June and begins operation, production capacity will be expanded to 150 tons in the first year and up to 500 tons in the mid to long term. In effect, this marks the establishment of a domestic mass production base for solid-state battery materials targeting the next-generation secondary battery market.

The lithium sulfide production facility construction site located at Isu Specialty Chemical's factory in Onsan-eup, Ulju-gun, Ulsan. The company is building a lithium sulfide production facility, a key material for all-solid-state batteries, aiming to complete it in June. Currently, the annual production capacity is 40 tons, and upon operation of the mother plant, it plans to increase production capacity to 150 tons in the first year and up to 500 tons in the mid to long term. Provided by Isu Specialty Chemical.

Such investment was made possible by funding from the National Growth Fund. The National Growth Fund provided 100 billion won, covering plant construction and initial operating expenses. The project, which required a total investment of 85.2 billion won, was financed with a long-term loan structure featuring a 10-year maturity and an interest rate in the low 3% range. This is at least 1 percentage point lower than the market rate, resulting in expected savings of over 10 billion won in financing costs. Given that Isu Specialty Chemical's annual operating profit last year was only 1.4 billion won, this support is unprecedented. The company emphasized that beyond the favorable interest rate, the greatest benefit has been enhanced investment stability.

A company representative explained, "Previously, the short-term borrowing structure with one-year maturity meant high interest rate volatility and significant repayment pressure. Securing long-term, ultra-low interest funding has significantly reduced our investment burden and accelerated the establishment of a stable production system." He added, "After attracting government investment, internal morale has improved, and this has led to additional financial proposals from other institutions."

At the end of February, Kwon Daeyoung, Vice Chairman of the Financial Services Commission, was the only official to personally visit the Isu Specialty Chemical Onsan plant among all National Growth Fund investee companies, spending about an hour touring the site. Vice Chairman Kwon reportedly handed his business card, including his personal contact information, to the head of the finance team who guided him and encouraged them to reach out at any time with any difficulties. On site, this was seen as a symbolic gesture demonstrating the government's strong commitment to support. The employee recalled, "The benefits of low interest rates and long-term borrowing were so significant that I worked tirelessly since March last year to secure National Growth Fund investment. Being selected as an early-stage investee and having Vice Chairman Kwon visit the plant personally to promise support has been a tremendous boost."

This investment is considered a case in which policy finance proactively supplemented funds needed to overcome the so-called "Death Valley" phase, the initial stage of technology mass production where private investment is difficult to attract. The driving force behind the National Growth Fund's investment decision lies in the company's overwhelming technological capabilities. Isu Specialty Chemical holds purification technology for hydrogen sulfide and patents for the production of high-purity lithium sulfide. Lithium sulfide is a crucial raw material for the solid electrolyte in solid-state batteries and is a strategic material that will determine the success or failure of next-generation secondary battery commercialization.

Unlike conventional lithium-ion batteries, solid-state batteries use a solid electrolyte instead of a liquid one, greatly enhancing both safety and energy density. The industry expects commercialization by 2027, and in Korea, Samsung SDI is aiming for mass production at that time. Lithium sulfide accounts for about 40% of the cost of solid-state batteries, so demand is expected to surge when the market takes off.

A company representative stated, "China is approaching with price competitiveness, but lithium sulfide remains one of the few areas where Korean companies have technological superiority. With government support as a stepping stone, we will rapidly establish a large-scale mass production system and secure the high-quality solid-state battery materials market with ultra-gap technology." He further emphasized, "We are determined to make this business a success so that lithium sulfide can become a Korean national strategic resource on par with Chinese rare earth elements."

Isu Specialty Chemical is also cited as a model case of business restructuring in the currently reorganizing petrochemical industry. The company has moved beyond commodity products to commercialize high value-added chemical materials such as TDM, NOM, and NDM, which operate in an oligopolistic market structure, thus advancing its business portfolio. This stands in stark contrast to the traditional petrochemical industry, which is facing oversupply. Such proactive business restructuring is also believed to have positively influenced the National Growth Fund's investment decision.

Currently, demand for the National Growth Fund is surging. As of March, a total of 181 requests for investment, amounting to 210 trillion won, have been received from companies, local governments, and relevant ministries.

A Financial Services Commission official stated, "Through the National Growth Fund, we will proactively invest in companies with funding needs, thereby leading to the inflow of private capital and supporting the growth of innovative businesses. We plan to continue to expand funding across the innovation industry as a whole."

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