Targeting the U.S. Market: Korean Batteries to Track and Manage Nickel and Graphite Supply Chains from Raw Material Stage

Non-PFE Qualification Required for U.S. Exports

LS and L&F Joint Venture Precursor Plant

Begins Qualification Testing... Full-Scale Production Next Year

As price competition with Chinese products becomes increasingly difficult, the battery industry is diversifying its sources of raw materials. In addition, companies are strengthening their ability to trace and manage the supply chain from the raw material stage of cathode and anode materials in order to meet the Non-PFE (Non-Party Foreign Entity) requirements designed to restrict the involvement of countries of concern such as China and Russia.

According to industry sources on September 17, the precursor plant established as a joint venture between LS Group and L&F has begun an eligibility test to apply sulfate-based metals, pilot-produced by LS MnM, to precursors (substances preceding cathode materials). Once this test is complete, the joint venture LLBS (LS & L&F Battery Solution) plans to begin full-scale mass production of precursors from next year. Commercial operations are expected to become possible from the fourth quarter, with an annual production capacity of 40,000 tons. The company aims to gradually increase this to 120,000 tons by 2029.

An image visualizing the applications of batteries. Generated by ChatGPT.

The joint venture is planning to ensure a thorough Non-PFE status starting from the procurement of raw materials. Since batteries containing more than 40% materials or entities associated with PFE countries and companies are ineligible for subsidies in the United States, the company aims to target the North American market by establishing a supply chain composed exclusively of non-Chinese materials.

To secure nickel, a key raw material for cathode materials, LS MnM is investing in a smelter in Indonesia and will begin mass production and supply of nickel intermediate product (MHP) from next year. MHP acquired in Indonesia will be shipped to the LS MnM Onsan plant and mixed with black mass—a pre-processed material from used batteries—to produce nickel sulfate and cobalt sulfate, among other products. According to a representative of LS MnM, "Intervention from China and other countries is thoroughly excluded from the process of securing nickel, a critical raw material for battery materials."

POSCO Future M is also working to diversify the graphite supply chain, which is currently dominated 90% by Chinese sources. The company sources natural graphite from Tanzania and Mozambique, while producing synthetic graphite anode materials in Pohang and Vietnam using coal tar, among others. A company representative said, "We are diversifying the supply chain from raw material procurement to processing and anode production." Ecopro BM sources nickel from Indonesia and produces cathode materials in Pohang and Hungary. The Debrecen plant in Hungary, targeting the European market, began operating its first line on June 1 and will add a second line by the end of this month.

In particular, North American battery energy storage systems (BESS) projects, which are expected to lead the market in the future, require a minimum of 55% Non-PFE raw materials and equipment starting this year, rising to 75% by 2030. Reducing the use of Chinese materials is now essential for maintaining competitiveness in the US market.

Hwang Kyeong-in, research fellow at the Korea Institute for Industrial Economics and Trade (KIET), noted, "Non-PFE certification is a prerequisite for obtaining the Advanced Manufacturing Production Credits (AMPC), so Korean companies need to lower their dependence on China. While this may represent a short-term burden, if manufacturers and material suppliers form strong partnerships to ensure the stable supply of US-bound products, it is possible to shift toward using hardly any Chinese materials."

This content was produced with the assistance of AI translation services.