Latest news with #USInflationReductionAct
Korea Herald
21 hours ago
- Business
- Korea Herald
Industry minister nominee pushes Korean take on US Inflation Reduction Act
Kim Jung-kwan calls for bold industrial policy to match US, China as tech rivalry intensifies Kim Jung-kwan, the first nominee for industry minister under the Lee Jae Myung administration, has pledged to introduce a production-linked tax incentive system for key industries such as semiconductors and batteries, modeled after the US Inflation Reduction Act. In a written response submitted to the National Assembly ahead of his confirmation hearing this week, Kim emphasized the need for aggressive government support that matches policies implemented by competing nations. 'It is time for strategic and proactive government-led industrial policies, including incentives that do not fall behind those of competing nations, in order to minimize trade risks,' Kim stated. He noted that while semiconductors remain a core pillar of Korea's industrial and economic security, the country's leadership in memory chips is being challenged by Chinese and US firms, and its capabilities in logic chips remain relatively weak. 'We need bold semiconductor policies to strengthen our global leadership and stabilize our domestic manufacturing base,' Kim said, adding that tax and fiscal support for the sector will be expanded. Addressing the battery sector, Kim acknowledged current difficulties stemming from a temporary slowdown in electric vehicle demand and the rapid rise of Chinese competitors. He said the government will consider introducing production tax credits for key minerals and materials to expand incentives for domestic manufacturing and strengthen the battery supply chain. Kim's vision for production tax credits involves a system that offers tax deductions based on production volume, effectively functioning as subsidies linked to output. The US has implemented similar 'Advanced Manufacturing Production Credits' under the IRA to support strategic industries such as batteries, solar panels and clean fuels. In Korea, companies operating in sectors designated as national strategic technologies, such as semiconductors and batteries, are currently eligible for one-time tax credits of up to 25 percent for facility and research and development investments. Unlike these investment-based incentives, Kim's proposed scheme would serve as a more direct benefit by offering tax credits on a portion of production costs. If implemented, leading chipmakers Samsung Electronics and SK hynix are projected to receive annual tax reductions of between 4 trillion won and 5 trillion won ($2.9 billion and $3.6 billion). President Lee had also pledged during his campaign to push for production tax credits of up to 10 percent for semiconductors. After taking office, he reportedly expanded the plan to include the battery sector, initiating internal reviews. In his statement, Kim also vowed to expand the government budget for renewable energy. 'Expanding renewable energy is an urgent task for achieving carbon neutrality, enhancing energy security and creating new growth drivers,' he said, pledging to improve the overall environment for renewable energy deployment including identifying new project sites, securing grid connectivity and increasing public acceptance. At the same time, Kim expressed support for nuclear energy, stressing the importance of a balanced energy mix of carbon-free sources to ensure a stable power supply and meet South Korea's greenhouse gas reduction targets under the Nationally Determined Contribution framework. He also pledged to boost Korea's long-term technological competitiveness by developing Korean-style small modular reactors and next-generation nuclear fuels, while expanding exports of nuclear equipment and supporting small and mid-sized exporters in the sector. On the issue of extended tariff negotiations with the US, set to conclude by Aug. 1, Kim said he would work toward a mutually beneficial outcome and use the talks as an opportunity to develop a bilateral manufacturing cooperation roadmap. 'In the face of US tariff measures and global supply chain shifts, I will do my utmost as Korea's 'export frontrunner' to strengthen our export competitiveness in key industries and open up new markets,' he said. Kim, a former official at the Ministry of Economy and Finance, most recently served as head of marketing at Doosan Enerbility, a major power equipment builder. Since his nomination, he has divested all holdings in companies that could present potential conflicts of interest, including shares in Doosan.
Korea Herald
07-07-2025
- Automotive
- Korea Herald
LG Energy Solution returns to profit in Q2 on strong US demand
LG Energy Solution said Monday that it posted a profit in the second quarter of this year, primarily driven by its stellar performance in electric vehicle and energy storage systems in the North American market. According to the company's preliminary earnings, from April to June, its operating profit skyrocketed 152 percent to 492.2 billion won ($360.5 million), while sales revenue slipped 9.7 percent to 5.56 trillion won from the previous year. This figure marks the first time in six quarters that LG Energy Solution has recorded a profit when not including financial benefits from the Advanced Manufacturing Production Credit outlined in the US Inflation Reduction Act. The company posted an AMPC-excluded profit of 1.4 billion won in the second quarter. 'Several key factors have contributed to the increase in profit, including rising demand for highly profitable battery products from North American clients, local ESS production in North America and ongoing cost-saving efforts,' said an industry source familiar with the matter, on condition of anonymity. LG Energy Solution signed an agreement with the US-based Delta Electronics to supply 4 gigawatt-hour battery cells for ESS applications, enough to power 400,000 US households for a day. The company began mass production of lithium iron phosphate (LFP) pouch cells at its Michigan plant last month, marking the first instance of a global battery manufacturer starting large-scale LFP battery production for ESS within the US. However, the source noted that sales declined during the same period, partly due to conservative inventory management by European automakers and a drop in production volume in China. This adjustment was a strategic move to minimize exposure to US tariffs on Chinese-manufactured ESS products. As part of its cost-reduction strategies, the battery maker decided to suspend the planned ESS investment in Arizona and instead utilize the Michigan plant earlier in the year. In response to a downturn in the global EV industry, the company also acquired a third joint venture plant with General Motors in Michigan to address the EV battery demand initially intended for LG's Michigan facility. 'We are aware of the increased external volatility from major US policy changes, which makes it challenging to predict market demand,' stated LG Energy Solution in a press release. 'However, we consider the initiation of mass production for new battery chemistry products targeting European EVs and the full-scale ESS production in North America as key opportunities to improve our earnings in the latter half of this year.' Industry insiders suggest that the recent passage of Donald Trump's 'One Big Beautiful Bill' is expected to have a limited impact on Korean battery companies such as LG Energy Solution. This is because the AMPC is set to conclude at the end of 2031, only a year earlier than originally planned. On the other hand, the $7,500 consumer tax credit for new EV purchases under the IRA has been accelerated to this September from the end of 2032.
Business Times
07-07-2025
- Automotive
- Business Times
South Korea's LG Energy Solution says Q2 profit likely up 152% on year
[SEOUL] South Korea's LG Energy Solution (LGES), an electric car battery supplier for General Motors and Tesla, on Monday (Jul 7) estimated a 152 per cent rise in its quarterly operating profit. LGES said its operating profit was likely 492 billion won (S$461 million) for the April to June period. That compared with a 195 billion won profit a year earlier and a 294 billion won profit forecast compiled by LSEG SmartEstimate, weighted towards analysts who are more consistently accurate. Analysts said LG Energy Solution's operating profit likely benefited from extra demand by automakers in the second quarter, as many rushed to secure battery cells ahead of potential US tariffs. Automakers were also likely betting on a recovery in sluggish electric vehicle demand, prompting early purchases. The South Korean battery maker said it expected an operating profit of 1.4 billion won in the second quarter, excluding tax credits under the US Inflation Reduction Act. LGES is expected to release detailed results in late July. REUTERS
Korea Herald
10-06-2025
- Automotive
- Korea Herald
Posco Future M advances supply chain independence with new precursor plant
Facility aims to meet rising demand for China-independent battery materials amid shifting US trade policies Korean battery material manufacturer Posco Future M officially opened its new precursor plant Tuesday in Gwangyang, South Jeolla Province, marking a key step in its efforts to build a self-sufficient supply chain. 'The completion of this precursor plant, following Posco Group's establishment of its own nickel supply chain, marks the realization of a fully self-sufficient system, from raw materials to intermediate products and the finished cathode material,' said Eom Gi-chen, CEO of Posco Future M, during the opening ceremony. 'In today's rapidly changing global supply chain landscape, the Gwangyang precursor plant will enhance the competitiveness and growth of Korea's battery industry.' The 22,400 square meter facility has an annual production capacity of 45,000 metric tons of precursor — a chemically synthesized mixture of metals used in cathode materials — enough to support battery production for 500,000 electric vehicles, the company said. The facility, which has been ramping up operations since May, was largely in operation during a media tour held the same day. The plant was filled with around 50 large metal tanks spread across the factory floor. The precursor production process involves six main steps: dissolving metals in purified water, inducing chemical reactions with catalysts to form precursor crystals, then washing, dehydrating, drying and packaging the final product. 'The reaction process is the core of precursor manufacturing, as it determines the material's density and elemental ratio, both of which are tailored to meet customer specifications,' a company official said, noting Posco Future M's flexibility in adjusting compositions to client needs. Currently, the company uses nickel, cobalt and manganese to produce precursors for NCM cathodes used in electric vehicle batteries, according to the order by Ultium Cells, a US-based 50:50 joint venture between LG Energy Solution and General Motors. 'All precursors produced at this facility are currently supplied to Ultium Cells,' the official added. The company said the timely launch was driven by growing demand from customers for China-independent supply chains, while many other battery projects have been delayed amid sluggish EV demand. The US Inflation Reduction Act disqualifies EV batteries containing materials from 'foreign entities of concern,' including China, from tax credit eligibility. This policy shift has prompted automakers to reduce reliance on Chinese suppliers, who currently dominate 90 percent of the global precursor market. To meet these evolving demands, Posco Future M said it has also secured alternative sources for raw materials used in precursor production. 'We understand the risks automakers face when their supply chains are overly concentrated in China. Regardless of cost considerations, that's where the competitiveness of our plant comes in,' said Lee So-young, head of the business strategy planning group at Posco Future M. 'As US policies continue to evolve, we're working to establish a supply chain that's less exposed to such changes, including sourcing raw materials independently of Chinese suppliers.' The plant's 10 production lines are controlled by about 10 staff members via monitors that provide a real-time overview of the process. With a high degree of automation, the company aims to enhance quality control of its cathod materials — a factor it says was more difficult to achieve when using externally sourced precursors. 'When customers request specific features, many of them cannot be achieved simply by processing third-party precursors,' Lee added. 'We believe our ability to meet those demands in both quality and cost also gives us a key competitive edge.'
Yahoo
19-05-2025
- Business
- Yahoo
Analysis: Cyril Ramaphosa's Washington Test
When President Cyril Ramaphosa walks into the White House this week, he does so with the ghost of Volodymyr Zelensky behind him — a reminder of how Trump uses power to dominate, not negotiate. 'You have no cards,' Trump famously barked at Zelensky. Ramaphosa, it must be said, does have some cards — though Trump has more than him. This meeting is being framed as a diplomatic reset. But those familiar with Trump's foreign policy playbook know that 'reset' often means 'submit.' The White House has a bee in its bonnet over South Africa's positions on Israel, BRICS, and what it views as 'anti-West' posturing. The genocide case against Israel at the ICJ has enraged Washington. Trump's counter? Embrace fringe claims of persecution against Afrikaners — muddying the waters by mirroring the ICJ language. Yet South Africa is not without leverage. Despite domestic volatility, it holds the keys to part of the 21st-century global economy: minerals. It controls over 80% of global platinum reserves and ranks among the top producers of vanadium and manganese — all essential to battery technology, defence systems, and the green energy transition. The US Inflation Reduction Act and CHIPS Act make clear that mineral supply chains are now a matter of national security. And South Africa, quite literally, is sitting on the motherlode. In return for recognition as a strategic partner, Pretoria may offer a trade deal modeled on the UK-US framework, with reciprocal tariffs around 10%. That would quietly acknowledge that AGOA — the duty-free agreement once seen as a cornerstone of US-SA ties — is effectively over. Moving from preferential access to bilateral parity signals a shift from supplicant to equal. But it comes at a price: South African exporters lose competitive edge, and Washington knows it. This may not be the end, but the beginning of a longer diplomatic dance. South Africa wants Trump to attend the G20 Heads of State Summit in Johannesburg this November, ideally with a state visit. That platform offers space for symbolism, trade deals, and strategic theatre — if this week sets the tone. But for progress, South Africa must be understood — not caricatured. There is no genocide against Afrikaners. The ICJ case is not an attack on the West, but a defence of international legal norms. Pretoria may lower the volume, but it can't walk away now. The case has advanced too far to retreat without looking weak. Meanwhile, Trump's allies are circling. Elon Musk's Starlink wants market access without BEE compliance or social investment obligations — a pressure point that will test South Africa's regulatory sovereignty and political resolve. Ramaphosa has leverage — minerals, legal capital, and moral voice. If he uses them well, this could be a moment of strategic affirmation. If not, he risks leaving Washington with the optics of diplomacy — and a deal already written in Washington ink.
