SK Innovation shifts into full gear for EV battery biz
Seoul, April 25 SK Innovation, South Korea's refinery-to-battery maker, is back in the driver's seat to propel its electric vehicle battery business with stake sales and a planned listing of its subsidiary as its recent settlement with LG Energy Solution Ltd. cleared prolonged business uncertainties.
The subsidiary of the nation's No. 3 conglomerate, SK Group, reached a $1.8 billion settlement with its bigger home rival LG Energy Solution Ltd to end a two-year legal battle for the EV battery business in the United States.
SK Innovation agreed to pay half in cash to LG Energy through 2022 and pay the rest in royalties starting in 2023.
The long-awaited compromise, which came in just before the April 11 deadline for the U.S. International Trade Commission's 10-year import ban on SK Innovation, cleared the stumbling block for its $2.6 billion factory in Georgia, which was under construction to supply EV batteries to Ford Motor and Volkswagen starting next year.
"The settlement cleared uncertainty over (SK Innovation's) battery business and its push in the U.S. market," SK Innovation CEO Kim Jun said in an email to its employees after the agreement. "We will step up construction of the Georgia plant and will expand investment and partnerships to target the rising EV market."
SK Innovation, the world's No. 6 EV battery supplier, plans to ramp up its battery production capacity globally to over 125 gigawatt hours by 2025, and in January, it announced a 1.3 trillion-won investment plan to expand its Hungary factory. It also has factories in South Korea and China.
SK Innovation's clients include Volkswagen and Ford in the U.S., Daimler in Europe, and Hyundai Motor and Kia in Asia, reports Yonhap news agency.
Now, it is set to raise funds needed to expand its manufacturing capacity and pay the settlement money via an initial public offering (IPO) of its battery separator making unit and sales of stakes in petrochemical subsidiaries.
SK Innovation, which has a broad portfolio from refinery and gas to battery and chemicals, is also pushing to sell its stakes in its petrochemical affiliates to propel its EV drive.
SK innovation said last month it will sell its entire stakes in two shale gas mines in the U.S. to Texas-based BenchMark Energy Corp., which was estimated at around several hundreds of million dollars. The exact amount of the deal was not disclosed.
In 2019, the company sold two Peruvian gas fields for 1.25 trillion won to reduce its reliance on traditional energy business.
Last year, its battery business's sales more than doubled to 1.6 trillion won, while booking 426.5 billion won of operating losses.