SK Innovation plans to build a third electric vehicle (EV) battery manufacturing plant in Hungary, as part of the reorganization of the battery supply chain to meet the rapidly growing demand in Europe.

Although the European Union is advancing with its own manufacturing capacity through the Battery Alliance, notably with new Northvolt factories in Sweden and Poland, the evolution of the supply chain will also involve Asian companies working within the EU.

For example, given the crucial importance of the Chinese market to German automakers, the future will be one of cooperation, including partnerships to help German companies manufacture their own batteries in-house.

BMW works closely with Chinese lithium-ion battery company 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 from South Korea, the site chosen is Hungary, via SK Battery Hungary (SKBH). Its first 7.5 GW plant in the town of Komarom, near the border with Slovakia, began mass production in the first quarter of 2020.

Its second plant, a 9.8 GW plant, will start mass production in the first half of 2022. The Export-Import Bank of Korea has signed a $ 500 million green loan for SK Innovation to help to finance the construction of the plant. The bank says its support will help SK Innovation expand its presence in the European market for batteries for electric vehicles.

“Korean battery makers are pushing for aggressive investment to stay ahead of other companies in the global battery market, which is often referred to as the next semiconductor,” Korea Eximbank Chairman Bang Moon-kyu said. “We anticipate that this financial support could help build 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 plans to invest a total of 80 trillion won ($ 71.8 billion) over the next decade in support of the country’s New Deal initiative to help the country. to recover from the pandemic. Different types of investments will be offered for seven key sectors, including hydrogen, solar power, secondary batteries and energy storage systems, future mobility, 5G, pharmaceuticals and healthcare.

The biggest investment

On June 15, Hungarian Foreign and Trade Minister Peter Szijjarto led a group of government officials on a visit to the SKBH factory in Komarom. In his speech, Szijjarto revealed that SK Innovation has decided to build a third electric vehicle battery factory with an annual production capacity of 30 GWh in Ivancsa, 50 kilometers south of Budapest. The initial investment will be around 1.3 billion euros ($ 1.55 billion).

He noted that Ivancsa will be the largest entirely new investment in Hungarian history. Szijjarto said that the construction of such a gigantic factory requires the development of infrastructure and that the government will support SK Innovation as much as possible, especially in the areas of transport and electrical infrastructure.

In the United States, SK Innovation is building two electric vehicle battery factories in Georgia with an investment of US $ 2.6 billion. SK’s first plant is expected to begin initial operations this year, with full mass production slated for 2022. An adjacent second plant will begin mass production in 2023.

In August 2020, SMBC, ANZ and Shinhan Bank were co-arrangers and jointly commissioned bookkeepers for a $ 450 million syndicated green loan to SK Battery America. Ashurst advised the lenders.

In January of this year, SK Battery America sold $ 1 billion worth of green bonds, in an offer led by Bank of America, HSBC, Citigroup Global Market, Crédit Agricole and BNP Paribas. The offer has been oversubscribed nine times.

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