South Korea’s Hyundai Motor Group and Korea Zinc Co. signed a memorandum of understanding (MoU) on Wednesday to establish a business partnership for battery core materials. HMG Global LLC, an overseas entity jointly invested by Hyundai Motor Co., Kia Corp., and Hyundai Mobis Co. has agreed to acquire a 5 percent stake in Korea Zinc through a rights offering to a third party.

The price per share is 504,333 won ($381.5), totaling 527.2 billion won. The two companies plan to engage in comprehensive cooperation in the field of battery materials, including jointly securing raw materials for nickel, a key material for electric vehicle (EV) batteries. The cooperation between Hyundai Motor Group and Korea Zinc is significant in that it takes place together with acquisition of a stake.

Hyundai Motor’s stake acquisition is also expected to strengthen the management power of Choi Yun-beom, chairman of Korea Zinc. With the addition of Hyundai’s friendly shares, Choi’s stake is expected to exceed that of Young Poong Group.

The key purpose of the MoU is to jointly build a stable supply chain for nickel. Following the U.S. Inflation Reduction Act (IRA) enacted last year, Hyundai Motor has been accelerating its efforts to secure a supply chain outside of China.

Under the IRA, subsidies are granted not only based on the country of origin of raw battery materials, but also on the nationality of the processing company.

Accordingly, the two companies plan to jointly purchase nickel raw materials and jointly invest in mine development projects to secure core raw materials that meet the IRA standards.

For Hyundai Motor, which aims to produce 3.64 million EVs by 2030, ranking the top three in the world, securing a stable battery value chain is paramount to expanding its market share in the U.S., its largest market.

Utilizing its technology in smelting non-ferrous metals such as zinc and silver, Korea Zinc started producing nickel sulfate for secondary batteries in 2017 and recently established a subsidiary to produce precursors, intensively expanding its business in the field of battery raw materials. The two companies also plan to cooperate in new businesses such as recycling waste batteries. Korea Zinc will take over the waste batteries from Hyundai Motor and crush them to obtain nickel and lithium.

By Oh Soo-hyun and Choi Jieun

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