[Report] National Growth Fund Helps Overcome 'Death Valley'... Inside the All-Solid-State Battery Mass Production Hub [Change the Flow of Money] ①

On the afternoon of April 20, at the Isu Specialty Chemical plant located in Onsan-eup, Ulju-gun, Ulsan, four buildings, each approximately 20 meters tall, stood prominently on a large site beyond the factory entrance, where the pungent smell of sulfur permeated the air. Inside the plant, thick pipes were intertwined like a web, and workers were busily connecting pipelines. The unique sense of tension characteristic of a chemical plant nearing completion filled the scene. Here, an additional production facility for lithium sulfide-the key raw material for all-solid-state batteries, which are regarded as "game changers" for the future battery market in sectors such as electric vehicles and robotics-was under construction. The final stages of the process were in progress, aiming for completion in June and for operations to start 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, scheduled for completion in June, begins operations, annual production capacity will increase to 150 tons in the first year and expand to 500 tons in the mid to long term. This will establish a full-scale domestic production base for all-solid-state battery materials targeting the next-generation secondary battery market.

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

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This investment was made possible by funding from the National Growth Fund. The fund provided 100 billion won to support both the construction of the plant and initial operating expenses. For this project, with a total investment of 85.2 billion won, a long-term loan structure was applied with a 10-year maturity at an interest rate in the low 3% range. This is at least 1 percentage point lower than the prevailing market rate, resulting in expected financial cost savings of more than 10 billion won. Considering that Isu Specialty Chemical’s annual operating profit last year was only 1.4 billion won, this is an exceptional level of support. The company emphasized that, beyond the favorable interest rate, the greatest benefit is the enhanced investment stability.

A company official explained, "Previously, the short-term borrowing structure with one-year maturities meant we faced significant interest rate volatility and repayment pressure. By securing ultra-low interest funding on a long-term basis, our investment burden has been greatly reduced, allowing us to accelerate the establishment of a stable production system." He added, "After attracting government investment, internal morale has improved significantly, and this has led to additional financing proposals from other financial institutions."

At the end of February, Kwon Daeyoung, Vice Chairman of the Financial Services Commission, paid a personal visit to the Isu Specialty Chemical Onsan plant, the only company among National Growth Fund investees to receive such attention. During the visit, Vice Chairman Kwon handed his business card-including his personal contact information-to the plant’s finance team leader, encouraging them to reach out at any time if there were any difficulties. The scene has been interpreted on-site as a symbolic demonstration of the government’s strong support. The staff member recalled, "The advantages of low interest rates and a long-term loan structure were so substantial that I made every effort to attract investment from the National Growth Fund starting in March last year. Being selected as an initial investee and then having Vice Chairman Kwon visit the plant and personally promise support was a tremendous boost."

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This investment is seen as a case in which policy finance preemptively filled a funding gap during the initial mass production phase of new technology-the so-called "Death Valley" stage-where private capital is typically reluctant to invest. The decision by the National Growth Fund was driven by the company's outstanding technological capabilities. Isu Specialty Chemical holds patents for hydrogen sulfide refining and high-purity lithium sulfide production. Lithium sulfide is a key raw material that forms the solid electrolyte in all-solid-state batteries, making it a strategic material that determines the success or failure of next-generation secondary battery commercialization.

All-solid-state batteries differ from conventional lithium-ion batteries by using a solid electrolyte instead of a liquid one, greatly enhancing safety and energy density. The industry expects commercialization in 2027, with Samsung SDI targeting mass production by then. Lithium sulfide accounts for about 40% of the cost of all-solid-state batteries, and demand is expected to surge as the market opens.

A company official said, "Although China is closing the gap through price competitiveness, lithium sulfide is one of the few fields in which Korean companies maintain a technological edge. Leveraging government support, we will rapidly establish a large-scale mass production system to take the lead in the high-quality all-solid-state battery materials market with ultra-competitive technology." He added, "We are fully committed to making this business a success so that lithium sulfide can become a Korean national strategic resource comparable to Chinese rare earths."

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Isu Specialty Chemical is also cited as a model case for restructuring within the petrochemical industry. Moving away from a focus on general-purpose products, the company has advanced its business structure by commercializing high value-added specialty chemicals in oligopoly markets such as TDM, NOM, and NDM. This stands in contrast to the existing petrochemical sector, which is facing oversupply. Such a proactive shift in business structure also appears to have positively influenced the investment decision by the National Growth Fund.

Currently, the National Growth Fund is seeing overwhelming demand for capital. As of March, a total of 181 investment requests amounting to 210 trillion won had been submitted by companies, local governments, and relevant ministries.

An official from the Financial Services Commission stated, "Through the National Growth Fund, we will proactively invest in companies with capital needs, thereby encouraging private capital inflows and supporting the growth of innovative companies. We plan to continually expand funding across all innovative industries."

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