Korea Requests US to Clarify Companies Banned from Procuring Critical Minerals under IRA

The Korean government has requested the U.S. government to clearly define Chinese companies that should not be sourcing key minerals for electric vehicle batteries under the subsidy payment requirements of the U.S. Inflation Reduction Act (IRA).

According to the U.S. government gazette on the 18th (local time), the Korean government submitted official comments on the detailed guidelines for the IRA electric vehicle tax credit regulations released by the U.S. Department of the Treasury on March 31. The IRA includes a provision that from 2025, key minerals sourced from foreign entities of concern such as China, Russia, North Korea, and Iran must not be used in electric vehicle batteries to qualify for tax credit subsidies.

In response, the Korean government stated, "It is important to consider the unique complexity and global interdependence within the battery supply chain, from key mineral mining to cell manufacturing," and requested through its comments that the foreign entities of concern (FEOC) regulations fully take into account the complexity of the battery supply chain. They asked for clear identification of exactly which companies fall under this category.

Currently, the electric vehicle industry is expressing concerns that completely excluding Chinese key minerals will be very difficult, considering China's absolute share in the supply of key minerals.

Additionally, the government requested that more key mineral exporting countries be added to the list of Free Trade Agreement (FTA) partner countries eligible for subsidies, in relation to the IRA’s requirement that key minerals must be mined and processed in the U.S. or countries with which the U.S. has an FTA. The government pointed out, "The current key mineral supply capacity of the 21 countries with which the U.S. has an FTA is insufficient to meet all IRA requirements," and added, "Moreover, key mineral mining locations are fixed, and some key minerals exist only in very specific regions."

Furthermore, the government requested clear explanations regarding the definitions of key minerals and battery components, the distinction between mining and processing, and the method for calculating the added value during the processing stages.