Seoul, South Korea - Hyundai Motor Group and Korea Zinc have signed a memorandum of understanding (MOU) for a partnership focused on sourcing and processing nickel for electric vehicle (EV) batteries.
Why it matters
This partnership is important to ensure a stable supply of critical materials for EV batteries, a cornerstone of the industry's growth.
It is timely due to increasing regulatory requirements and global supply chain complexities.
The Key Points
- Hyundai aims to source 50% of its nickel requirements in compliance with the Inflation Reduction Act (IRA) by 2031.
- As part of the agreement, HMG Global, a joint venture of Hyundai Motor, Kia, and Hyundai Mobis, will acquire a 5% stake in Korea Zinc, valued at approximately KRW 527.2 billion.
- The partnership also aims to explore new business opportunities, such as battery recycling.
- Regulatory compliance is a key focus, with the sourced nickel expected to meet both IRA and European Union Critical Raw Material Act (CRMA) requirements and other ESG criteria.
The Big Picture
Hyundai's overarching strategy is to secure critical raw materials such as nickel and lithium through partnerships to stabilize its supply chain.
The partnership aligns with Hyundai's announced goal to produce 3.64 million EVs by 2030 and position itself among the top three global EV manufacturers.
Korea Zinc, involved in non-ferrous metal smelting, further expands its reach into the EV market through this partnership.
The company established a subsidiary for nickel sulfate production in 2017 and plans to establish another subsidiary for precursor production this year.
The collaboration also includes a financial commitment: HMG Global's 5% stake in Korea Zinc, with share transfer restrictions for one year after the purchase.
The equity investment process is expected to be completed by September 12.