South Korean Battery Industry Lacks Foundation for Battery Materials

Jul 10, 2019

As tension rises between South Korea and Japan, some bring up a possibility that Japanese Government’s regulation on exportation of semiconductor materials will eventually affect South Korea’s battery industry, which is considered as the ‘second semiconductor industry’ by South Korean Government, as well. Sony (currently Murata) commercialized world’s first lithium-ion battery in 1991. As a result, Japanese businesses possess many fundamental technologies related to battery materials, parts, and instruments. However, majority of South Korea’s battery industry believes that Japanese Government’s regulation will not be a huge issue as there are already replacements and most of supply network for battery materials by South Korea’s major battery manufacturers is already bimodal. However, some are concerned that there can be a setback to supply and demand that is different from that of semiconductor and display as production process is only ran after receiving an approval from a Smartphone manufacturer or an automotive manufacturer even during a development phase. Although LG Chem, Samsung SDI, and SK Innovation are distinguishing themselves within global market, there have been consistent criticisms that they also need to work on promoting an ecosystem for secondary battery materials in South Korea as supply network of relevant materials is weak.
South Korea defeated Japan, which was the originator of lithium-ion battery, in lithium-ion battery market and it has become the powerhouse in this market. Samsung SDI has steadfastly been the top business within small battery market. LG Chem, Samsung SDI, and SK Innovation are all ranked in the top 10 within electric vehicle battery market and they are currently supplying their batteries to major global automotive manufacturers.
However, story changes when it comes to battery materials. Markets for anodic material, cathodic material, electrolyte, and separator film, which are considered as the four most important materials of a lithium-ion battery, are mostly owned by Chinese and Japanese businesses. According to a Japanese market research company called Yano Research Institute, South Korean businesses only recorded one-digit market shares in these markets in 2017.
◊South Korean battery manufacturers heavily dependent on foreign businesses for battery materials
South Korean businesses only own 9.2% of the shares of cathodic material market. Cathodic material is an important material that is responsible for capacity and output of a battery, impacts entire performance of a battery, and is responsible for about 40% of entire production cost of a battery.
Although Umicore from Germany, ShanShan from China, and Nichia from Japan are leading this market, some South Korea’s medium-sized businesses such as L&F, ECOPRO BM, and COSMO AM&T are actually recognized for their output and technical skills in anodic material compared to other three battery materials. ECOPRO BM commercialized world’s first NCM811 cathodic material last year along with SK Innovation and it has high competitive edge in a field of high-nickel cathodic material that increases mileage of an electric vehicle.
In case of anodic material, which is the one that is heavily dependent on foreign businesses, South Korean businesses only own 3.9% of the shares. Chinese businesses own 77.3% of the shares of natural graphite anodic material market while Japanese businesses own 18.8% of the shares of artificial graphite anodic material. POSCO Chemical has consistently worked on increasing its production capacity of anodic materials. Dae Joo Electronic Materials and WFM are slowly gaining ground in next-generation silicon anodic material market.
South Korean businesses own 6.6% of the shares of electrolyte market and they are heavily behind Chinese and Japanese businesses in this market as well. Electrolyte is a material that plays a role of a medium that allows lithium ions to move between a cathode and an anode. South Korean businesses such as EnChem, SoulBrain, and Panaxetec supply their electrolytes to major battery manufacturers in South Korea. Although they heavily depended on Chinese businesses for LiPF6, which is one of major raw materials of an electrolyte, Foosung is one of South Korean businesses that supply LiPF6. Chunbo and Lichem are some of South Korean businesses that supply electrolyte additive that is becoming more important as electric vehicles are starting to become the norm.
South Korean businesses are beginning to lose their shares in separator film market as their market shares dropped to 8.1%. Separator film is located between an a cathode and an anode and it prevents direct contact between electrodes and causes current by allowing only lithium ions to pass through very small holes. Japanese businesses that traditionally have high technical skills in film have high competitive edge in separator film market. SK Innovation currently holds the second place followed by Asahi Kasei within wet separator film market. W-SCOPE is a South Korean business that is listed on Tokyo Stock Exchange and it has its production base in South Korea as well.
◊South Korean industries concerned about foundation of South Korea’s battery industry
Although there are South Korean businesses that manufacture these four materials, it is difficult for them to even satisfy demands from battery manufacturers as they cannot even handle enormous amount of facility investments to deal with electric vehicle battery market that is growing rapidly because most of them are small or medium-sized businesses. South Korean battery manufacturers receive significant amount of important materials from foreign businesses.
Japan, which commercialized lithium-ion battery and is a powerhouse in battery materials, holds 30% of the shares of separator film market and between 10 and 20% of the shares of rest of the other three markets. China, which has emerged as the world’s biggest electric vehicle and secondary battery market, is beginning to distinguish itself within these four materials markets. It currently owns more than 50% of the shares in all four markets.
Although there are South Korean businesses that manufacture these materials, experts are concerned that there is no ecosystem for raw materials that make up these four materials. South Korean battery manufacturers usually select products from Japan or China rather than helping South Korean battery material manufacturers strategically. Government support and research projects are also focused more on battery rather than components that make up a battery.
“Even if we develop a product and supplies it to a battery manufacturer, many South Korean battery manufacturers fund Chinese businesses to reduce their production cost.” said a CEO of a South Korean secondary battery material manufacturer. “Because battery manufacturers are heavily pressured by automotive manufacturers about reducing unit costs to popularize electric vehicle, they have no choice but to focus on securing competitive production cost rather than coexisting with battery material manufacturers.”
“Although we have some competitive edge in cathodic material market, most of precursors come from China and cobalt and nickel that are major minerals that make up these precursors also come from China.” said a representative for a different battery material manufacturer. “Although South Korea has the world’s best competitive edge in battery, ecosystems for raw materials and materials of a battery need to be solidified if we want our battery industry to develop even further.”
Staff Reporter Jung, Hyeonjung | iam@etnews.com

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