The government evaluated the detailed guidelines of the Inflation Reduction Act (IRA) announced by the U.S. Department of the Treasury on the 31st of last month (local time) as "reflecting a significant portion of our government's industry opinions."
The Ministry of Trade, Industry and Energy stated in a press release on the 1st, "With this announcement from the U.S., the domestic battery and materials industries have seen a considerable reduction in overall uncertainty," adding, "Battery supply chain cooperation between Korea and the U.S. is expected to be strengthened."
They added that even if our materials companies process cathode active materials domestically, they can meet the electric vehicle tax credit requirements, allowing them to consider various investment options. The government also evaluated that the diverse reflection of our opinions in the IRA detailed guidelines was possible due to efforts through various channels.
Lee Chang-yang, Minister of Trade, Industry and Energy, said, "Recently, President Yoon Seok-yeol met with the U.S. Trade Representative (USTR) and emphasized the difficulties faced by our companies. Relevant ministries have also submitted official statements and conducted consultations in the U.S. to ensure our opinions are reflected," adding, "We will actively support our industry to recognize the IRA as a new opportunity and respond proactively."
On the same day, the U.S. Department of the Treasury announced detailed IRA regulations that provide an electric vehicle subsidy of $7,500 (approximately 10 million KRW) only if more than 50% of battery components are manufactured or assembled in North America, and 40% of critical minerals are sourced from the U.S. or countries with which a Free Trade Agreement (FTA) has been concluded and processed.
Additionally, cathode active materials and other constituent materials will not be included in the category of battery components. As a result, the domestic battery industry is expected to qualify for IRA subsidies without changing existing processes.
Furthermore, although cathode active materials and other constituent materials are excluded from battery components, the manufacturing process of these constituent materials is recognized as part of the critical mineral processing. The Ministry of Trade, Industry and Energy stated, "The added value of cathode active materials and other constituent materials processed in the U.S. or FTA countries is included in the assessment of the mineral requirement ratio," and judged that "the compliance burden related to mineral requirements for our companies has been significantly eased."
The ministry also viewed the definition of recognized countries as the U.S. or FTA countries as meaningful, leaving room for other countries to be included depending on additional negotiations with FTA countries.
The ministry plans to hold an IRA-related briefing session for companies early this month in cooperation with KOTRA and the Korea International Trade Association. The detailed IRA guidelines will be applied starting from the 18th of this month.
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