SK Innovation plans to build a third electric vehicle (EV) battery manufacturing plant in Hungary, part of the moves to reorganize the battery supply chain to meet the rapid growth in demand in Europe.
Though the European Union is moving ahead with its own manufacturing capability via the Battery Alliance, notably with new Northvolt factories in Sweden and Poland, the evolving supply chain will also involve Asian companies working inside the EU.
For example, given the critical importance of the Chinese market to German auto makers, the future will be one of co-operation, including partnerships to help German firms manufacture their own batteries in-house.
BMW is working closely with Chinese lithium ion battery firm Contemporary Amperex Technology Ltd (CATL) and Samsung SDI. Daimler is also a close partner of CATL. Both have also signed long-term supply agreements with Northvolt.
Mass production
For SK Innovation of South Korea, the chosen location is Hungary, via SK Battery Hungary (SKBH). Its first 7.5GW plant in the city of Komarom, near the border with Slovakia, began mass production in the first quarter of 2020.
Its second, a 9.8GW factory, will start mass production in the first half of 2022. The Export-Import Bank of Korea has signed a US$500 million green loan for SK Innovation to help finance the construction of the facility. The bank says its support will help SK Innovation to expand its presence in the European EV battery market.
“Korean battery makers are pushing for aggressive investment to stay ahead of other companies in the world’s battery market, which is often called as the next semiconductor,” says Korea Eximbank chairman Bang Moon-kyu. “We anticipate that this financial support could contribute to building an industrial ecosystem with a virtuous cycle that can help strengthen the competitiveness of Korean companies and help the globalization of the K-battery.”
In January, Korea Eximbank revealed its plan to invest a total of 80 trillion won (US$71.8 billion) over the next decade in support of the country's New Deal initiative to help in the country's recovery from the pandemic. Various types of investments will be offered for seven key sectors, including hydrogen energy, solar power, secondary batteries and energy storage systems, future mobility, 5G, pharmaceuticals and healthcare.
Largest investment
On June 15 Hungarian Minister of Foreign Affairs and Trade Peter Szijjarto led a group of government officials visiting the SKBH plant in Komarom. In his speech, Szijjarto revealed that SK Innovation has decided to build a third EV battery factory with an annual production capacity of 30GWh in Ivancsa, 50 kilometres south of Budapest. Initial investment will be around 1.3 billion euros (US$1.55 billion).
He noted that Ivancsa will be the largest greenfield investment in the history of Hungary. Szijjarto said the construction of such a huge factory requires infrastructure development, and the government will support SK Innovation as much as possible, particularly in the areas of transportation and power infrastructure.
In the United States, SK Innovation is building two EV battery plants in Georgia with an investment of US$2.6 billion. The first SK plant is set to begin initial operations this year, with full mass production scheduled for 2022. An adjacent second plant will begin mass production in 2023.
In August 2020, SMBC, ANZ and Shinhan Bank were joint mandated lead arrangers and bookrunners on a US$450 million syndicated green loan to SK Battery America. Ashurst advised the lenders.
In January of this year SK Battery America sold US$1 billion worth of green bonds, in an offering led by Bank of America, HSBC, Citigroup Global Market, Credit Agricole and BNP Paribas. The offering was nine times oversubscribed.
