A Chinese billionaire who controls a key part of the battery supply chain is in talks to list some of his empire in South Korea, a step that could help his company invest and sell in the US despite Joe Biden’s policies aimed at cutting reliance on China.
Bai Houshan’s Shanghai-listed Ronbay Technology dominates part of the global market for high-nickel cathode electrodes and is expanding rapidly in South Korea.
The company is weighing plans to separate its Korean operations from its Shanghai entity in a bid to avoid tariffs of up to 25 per cent on Chinese-made components and access subsidies under Washington’s Inflation Reduction Act, according to three people familiar with the matter.
The company has told investors that an IPO in South Korea in the next two years is one option under consideration to work around the “crisis” caused by the new legislation, according to a presentation viewed by the FT. The company declined to comment.
Bai’s plans to split his group, which had revenues of more than $4bn in 2022, shows how companies are restructuring and exploring new licensing and partnership arrangements in response to deepening US-China tension.
Biden is doling out hundreds of billions of dollars in subsidies to boost American domestic manufacturing and cut US economic dependency on China.
Under the law, components from so-called foreign entities of concern, which includes China, are blocked from generous consumer tax credits and subject to additional tariffs.
Ronbay’s factory in Chungju, in the landlocked Korean province of North Chungcheong, produces high-nickel cathode materials, a product for which it holds about a third of the global market share, according to Bernstein data.
In a stock exchange filing in March, the company said it believed that shipments from its South Korean factory did not fall under the prohibitions of the new US laws.
According to separate disclosures over the past two weeks, the company plans to raise Rmb5.42bn ($750mn) through a new share issuance in Shanghai for its Korea expansion. It has signed a memorandum of understanding with “either a Japanese or Korean” company to sell 100,000 tonnes of high-nickel cathode materials for use in the North American market.
Ronbay’s strong market position reflects Chinese dominance across scores of materials and products critical to the world’s transition to cleaner energy systems, including electric vehicles, batteries, wind turbines and solar panels.
In the coming weeks, the Biden administration is expected to more explicitly define a “foreign entity of concern”, a decision that could further limit Chinese investments and the use of China-made components in the US clean-tech sector.
According to one person familiar with Ronbay’s plans, the timing of any Korean share sale will hinge on the outcome of that decision.
In an example of how US and Chinese companies are finding new ways to co-operate, the world’s biggest battery producer, China’s CATL, signed a deal in February with Ford to license the Chinese group’s technology for use in the US company’s $3.5bn Michigan factory.
However, the Ford-CATL deal has been met with opposition from US Republicans. Florida senator Marco Rubio has said the arrangement “will only deepen US reliance on the Chinese Communist party for battery tech”.
Chinese battery companies have forged a series of alliances with counterparts in US free trade partner countries, including South Korea, which is home to some of the world’s top battery makers, including LG and Samsung.
Korean battery maker SK On and materials producer EcoPro this year partnered with China’s GME Resources to produce battery components in South Korea, while Korean conglomerates LG and Posco have both partnered with Zhejiang Huayou Cobalt. In June, Posco announced joint ventures worth $1.2bn with China’s CNGR Advanced Material.
Source: Economy - ft.com
