Recently, SK On confirmed that it had finished development of its own LFP cell and was targeting mass production from 2026, whilst Posco publicly admitted it was considering LFP joint venture projects with Chinese players.

It is no secret that other South Korean majors such as LGES and Samsung SDI are all intensely developing LFP cells for the electric vehicle (EV) market. What was once considered an inferior and outdated chemistry has since seen a considerable resurgence. This is particularly significant as South Korea historically invested heavily in nickel-based cathodes over iron-based in an effort to maximise energy density figures. The fact that a substantial amount of attention has now shifted towards iron-based cathodes for this key-producing country means that they sense strong demand for such batteries over the coming years. North America and Europe are clearly major markets for iron-based batteries, with the former possessing very strong ties to South Korea due to their Free Trade Agreement (FTA). Inflation Reduction Act (IRA) tax credits will no doubt be a key part of the plan for these South Korean producers as they look to benefit from the scheme, although questions may be raised as to the origin of some material.

The first half of 2023 saw LFP imports into South Korea reverse to growth for the first time in over 8 years. This not only signalled the acceleration of South Korea’s LFP plans, but also that China is playing a key role in helping it achieve these ambitions. This may start to raise concerns for the US if China-produced material is finding its way into EVs through unspecified channels. Although the IRA stipulates that minerals cannot be extracted, processed or recycled by a Foreign Entity of Concern (FEOC), if a material’s composition changes substantially (i.e. constituent sulphates manufactured into precursor), then the material’s country of origin may also change. It is unconfirmed whether this LFP would be getting through the net in this way, but it wouldn’t be the first instance of plans for Chinese material to enter the US supply chain. Current specifics for IRA regulations remain cloudy in certain areas, which leads companies to look at alternative routes through the legislation in order to benefit and comply concurrently. The US government will be continually examining these regulations and is expected to revise its details in an effort to mitigate any unwanted, yet currently compliant, interpretations.

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