(Bloomberg) -- Ecopro Group, a battery materials maker that supplies Ford Motor Co. and Samsung SDI Co., plans to expand its manufacturing presence in South Korea, according to people familiar with the matter, after guidance last week clarified provisions around the US's landmark climate bill.
Ecopro already has a 5.3 million-square-foot site in Korea's southeastern metals hub of Pohang, where it's investing 3.2 trillion won ($2.4 billion) to produce 270,000 tons of cathode-active materials annually to be used in electric-car batteries. The company is considering another site of around 7 million square feet, the people said, asking not to be identified because the details are private.
Like the first site, Ecopro's second footprint would have a battery recycling facility and produce upstream products like precursors, one of the people said. A spend of around 2 trillion won is envisaged, according to the people.
Representatives from Ecopro, which is based in Cheongju-si south of Seoul, declined to comment. Shares in Ecopro rose as much as 6.5%.
Ecopro was holding off on its expanded investment plan while it waited on clarity from US officials on aspects of President Joe Biden's Inflation Reduction Act, one of the people said. The signature green bill contains significant provisions on electric vehicles and batteries.
The IRA is focused on reducing EV makers' dependence on “foreign entities of concerns” in global supply chains, including China. One of the most controversial parts splits a mooted tax credit in two, with $3,750 available for vehicles that get at least half their battery components from North America, and the remainder up for grabs if 40% of the value of the raw materials in the battery are extracted or processed domestically, or are from countries that have a free trade agreement with the US — as South Korea does.
Under guidance released in the US last Friday, cathodes and anode materials have been classified as “critical minerals,” not “components,” allowing companies like Ecopro to continue to produce at plants in South Korea and supply automakers in the US, Hanwha Investment & Securities Co. analyst Yongwook Lee wrote in an April 4 note.
This clarity was key to Ecopro being comfortable with moving ahead on a new plant, one of the people familiar with the matter said.
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