Latest news with #USInflationReductionAct
Korea Herald
3 days ago
- 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
3 days ago
- 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.
Morocco World
16-05-2025
- Business
- Morocco World
China's Backdoor: How Morocco Became Key in the Battery Trade War
Doha – Morocco has become a prime destination for large-scale Chinese investments in electric vehicle battery production, raising questions about whether this represents a genuine opportunity for industrialization or simply makes the country a pawn in the geopolitical rivalry between China and the West. In a paper published Wednesday by the Transnational Institute (TNI), Moroccan researcher Ali Amouzai examines how Morocco has positioned itself amid the global competition for strategic minerals essential to the green energy transition, particularly those used in electric vehicle batteries. 'Morocco has become a prime destination for large-scale investments in the refining of strategic and critical minerals that are used in the production of electric vehicle batteries, with Chinese companies taking the lead in this regard,' Amouzai writes in the paper titled 'Critical Raw Minerals in Morocco: An opportunity for industrialisation or a geopolitical battlefield between China and the West?' The analysis comes as several major Chinese battery manufacturers have announced investments totaling billions of dollars in Morocco. In September 2023, CNGR announced a $2 billion plan to build what it called a 'base in the world and pan-Atlantic region' in Jorf Lasfar, in a joint venture with the Moroccan royal family's investment group Al Mada. In June of the same year, Chinese-German battery maker Gotion High-Tech signed a deal with Morocco for a $6.4 billion investment to build Africa's first electric vehicle battery factory in BouKnadel, near Rabat, which is expected to have an annual production capacity of about 100 gigawatt-hours of electric vehicle batteries. Additionally, in March 2024, the Moroccan Ministry of Economy and Finance signed an investment agreement with China's BTR New Material Group, worth more than $3 billion, to build a new battery factory in the industrial zone of Tangier Automotive City. China's strategic workaround Amouzai explains that these investments are part of China's strategy to circumvent trade restrictions. 'The US–China trade war and the resulting geopolitical tensions, especially after Joe Biden's announcement of the Inflation Reduction Act, have left China in need of countries with open access to the US market, which means countries that have a free trade agreement with the US,' he notes. Morocco, with its free trade agreement with the United States, provides Chinese manufacturers a way to qualify for subsidies of up to $7,500 under the US Inflation Reduction Act. This represents what industry experts call 'friends-shoring' – sourcing minerals from mines and supply chains developed in countries with free trade agreements. The paper points out that Morocco ranks ninth globally in cobalt production and eleventh in cobalt reserves, making it Africa's second-largest producer after the Democratic Republic of Congo. The country also holds 70% of the world's phosphate reserves, which are used in cheaper electric vehicle batteries. Beyond the promised benefits While the Moroccan government has promoted these investments as transformative for the country's economy and industrial development, Amouzai questions the actual benefits. Then-Investment Minister Jazouli announced that Gotion High-Tech would create 30,000 jobs over 10 years, but the researcher argues these figures may be overstated. 'Permanent employment is one of the conditions for a fair green transition, but Morocco's experience thus far has shown that recent job creation in the country has largely been based on outsourcing/subcontracting,' Amouzai states. 'The jobs that are created are precarious, under flexible labour laws that were first introduced 20 years ago.' The researcher clarified that most major projects, such as renewable energy plants, are capital-intensive and mainly offer job opportunities during the construction phase. 'Once these stages are completed, most of these positions vanish, leaving behind only a limited number of high-skilled jobs,' he explains. Dependency and strategic position The paper argues that Morocco's strategy of embedding itself within global capital networks and exploiting rivalries between major powers will merely improve its position within the existing international division of labor rather than achieve true industrialization. 'Morocco remains a very small economy, ranking sixth in Africa in terms of GDP, behind Ethiopia, Algeria, South Africa, Nigeria and Egypt. Moreover, its productive economy is predominantly based on agriculture and the extraction of raw materials,' Amouzai explains, contextualizing the country's economic limitations. He challenges the notion that these investments will lead to technological transfer and industrial sovereignty. According to the researcher, Morocco's dependence on imperial centers is reflected in 'the tiresome repetition of the word 'sovereignty' in recent state documents: 'economic sovereignty', 'energy sovereignty', 'food sovereignty', etc.' The analysis highlights a fundamental contradiction in Morocco's approach. 'The state (and large capital) relies on foreign investments to overcome the second and third obstacles,' Amouzai writes. Meanwhile, 'the first obstacle (Morocco's political economy) is accepted by large Moroccan and foreign capital and international financial institutions, as the monarchy is the guarantor of political stability and social peace in a country located in a tense region,' he adds. He points out that 'Morocco's large (globalised) capital, which relies on the monarchy, has already a guaranteed share in the investments in critical and strategic minerals, and thus it has no interest in imposing conditions on them (e.g. technology transfer) that could yield increased industrialisation.' Environmental concerns Amouzai also questions the environmental credentials of these investments, arguing that the primary objective of Moroccan capital and the state in adopting green discourse is 'to obtain internationally pledged green funds, to signal its adaptation to the transformations taking place in its northern neighbour (especially after the EU's adoption of CBAM).' He adds that another key motive is 'to avoid any obstacles that may hinder Moroccan companies' ability to enter the European market.' The analysis suggests that Chinese companies have chosen Morocco partly to avoid stricter environmental regulations in Europe. As quoted in the report, Thorsten Lahrs, CEO of CNGR Europe, declared that obtaining environmental permits in Europe would take 'several years,' involving court proceedings and appeals, while in Morocco, '[CNGR Europe has] made significant progress in a month.' The paper concludes with recommendations for a green industrialization policy based on local demand rather than the prevailing export-based strategy. It calls for public industrial programs, a focus on domestic energy needs, urban planning changes, and greater Maghreb-wide cooperation. 'Energy (regardless of the source of that energy) can contribute to building a greener and more socially just future for Morocco, but energy is not independent of the world's economic structure, its social framework, its state institutions, and the various forms of oppression that permeate them,' Amouzai concludes. Tags: chinese investments in MoroccoUS-China trade war
