SK ie technology Co. (SKIET), the battery material subsidiary of SK innovation Co., is ramping up its effort to advance into North America to become eligible for U.S. tax legislation that favors battery production and assembly within North America.

The legislation, known as the Inflation Reduction Act (IRA), requires 100 percent of the value of battery components to be produced or assembled in North America to qualify for tax credits by 2029.

According to industry sources on Sunday, SKIET is expected to finalize a plan to produce separators in North America by 2028. Separators are one of the four major components of a battery, along with cathodes, anodes and electrolytes.

“We have two candidate markets - the U.S. and Canada,” said an unnamed official from the company. “We will consider the state‘s subsidies, production costs and labor expenses to determine where would be the best in our interest.”

SKIET has been increasing cooperation with its customers for local production in North America. Battery makers are believed to have pushed for replacing Chinese separators with Korean alternatives since the U.S. announcement of specific clauses in the IRA.

Separators are one of the Korean industries most likely to benefit from the IRA. SNE Research, a battery market research institute, found that China was the world’s largest separator supplier, with a market share of 68 percent. South Korea and Japan have occupied the rest. “Though China now holds an overwhelming market share globally, the IRA will force it to lose a majority of its share to South Korea,” said an industry source.

Korean separator manufacturers are also speeding up their advance into European markets. SKIET has begun production of separators at its first plant in Silesia Province, Poland, and its second plant there is expected to be operational in the second half of this year. The ongoing construction for the third and fourth plants will be completed next year. When the four plants start operations, SKIET will have the largest production facility for separators in Europe, with a capacity of 1.54 billion square meters.

By Lee Yoon-jae and Han Yubin

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]