South Korea to invest $29 billion in domestic battery materials industry

The funding is provided to help local electric vehicle (EV) battery producers diversify their supply chains over the next five years, the government said on Wednesday December 13

The financial package is aimed at reducing the country’s reliance on China, which currently produces most of the world’s battery materials. It is also likely to increase the competitiveness of South Korea’s battery industry in the global market, the government said.

Some of the funding will be used to invest in manufacturing production facilities in United States to help companies gain tax breaks from the US Inflation Reduction Act (IRA).

The South Korean government also plans to help companies build stockpiles of critical materials, such as lithium and cobalt, to ensure 100-day availability by 2031 to combat any potential supply chain disruptions.

The government also plans to establish new safety regulations on the removal, storage and transportation of used batteries within South Korea. It estimates that, if the country recycled all its used batteries, it could secure enough minerals for 170,000 EVs per year.

With geopolitical tensions increasing, the US has been urging vehicle producers around the world to reduce their reliance on China for critical materials.

China is the world’s largest producer of EVs and batteries, but in October it announced stricter regulations on the export of graphite-related items – items that are essential to the production of EV batteries – prompting battery producers elsewhere to seek alternative sources of supplies.

Weak demand in East Asia

Spot lithium prices in China has been on a precipitous downtrend, with battery-grade lithium carbonate prices trending below 100,000 yuan per ton over the week to Wednesday December 13, following increased volatility in the futures market and muted demand.

East Asian market also reported limited spot demand ahead of the year’s end, following the fall in demand in China, with market participants along the supply chain confirming that consumers were only relying on their long-term deliveries.

“It’s the end of the year. To avoid holding excess inventories for better annual financial performance, consumers have been keeping their lithium inventories at a minimum level,” a Chinese lithium producer source told Fastmarkets.

Many downstream cathode active materials (CAM) producers will reduce production in December and battery producers have been destocking, Fastmarkets understands.

China’s lithium iron phosphate (LFP) producers will reduce production by 10-20% in December, while nickel-cobalt-manganese (NCM) CAM producers are likely to cut production by 30-40%. Reduced demand pushed salts processors to cut prices to promote sales. Lithium prices are likely to decrease further considering high stocks in the spot market.

Market participants said that the lithium weakness the Chinese market could at least last until China’s Lunar New Year holiday, which takes place from February 10-17 2024.

Keep up to date with the latest news and insights on our dedicated battery materials market page.

What to read next
The graphite industry in 2025 faces major challenges, including trade wars, high US tariffs on synthetic graphite and policy changes affecting EV manufacturing and tax credits. Low natural graphite prices, oversupply and slow EV growth make diversifying supply chains essential for market stability.
Analysts suggest that the "One, Big, Beautiful Bill" may impact clean energy and battery manufacturing in the US by altering key incentives from the Inflation Reduction Act (IRA).This may disrupt supply chains, cut investment in renewable energy and raise costs for electric vehicles, home energy products and other clean technologies.
The rationale for MB-CO-0004 cobalt alloy grade, in-whs Rotterdam, $/lb had erroneously stated that an indication at $18.50-20.00 per lb was included in the assessment. This has been corrected to explain the indication was made outside of the pricing window, and had therefore been discarded. The published price is unaffected by this change. These prices are a […]
Fastmarkets, a leading price-reporting agency (PRA) and trusted source of cross-commodity market analysis, is proud to announce a collaboration with Intercontinental Exchange (ICE), a leading commodity exchange, to launch a new suite of futures contracts specifically focused on battery raw materials (BRM). The new contracts will address the rapidly growing demand for transparent and efficient […]
Discover how big oil is fuelling change in the global electric vehicle (EV) market with the latest episode of Fast Forward podcast
The US aluminium industry is experiencing challenges related to tariffs, which have contributed to higher prices and premiums, raising questions about potential impacts on demand. Alcoa's CEO has noted that sustained high prices could affect the domestic market. While trade agreements might provide some relief, analysts expect premiums to remain elevated in the near term. However, aluminum demand is projected to grow over the long term, supported by the energy transition and clean energy projects. To meet this demand, the industry will need to increase production, restart idle smelters and address factors such as electricity costs and global competition.