Amid escalating U.S.-China trade tensions, China's Ministry of Commerce is reportedly considering export restrictions on electric vehicle battery manufacturing processes and the extraction technologies for lithium, a critical mineral. In response, South Korea's secondary battery industry, heavily reliant on China for battery materials, is actively working to diversify its value chain and stabilize its supply chain to address this challenge.

According to industry sources on January 6, China's Ministry of Commerce has reportedly announced plans to include electric vehicle battery cathode material manufacturing technologies and the extraction processes for lithium and gallium in its export prohibition and restriction list. This move is expected to expand export controls from graphite to the cathode material and lithium sectors.

China's Ministry of Commerce announced that it will accept public feedback on the proposed measures until February 1. However, no specific timeline for implementing the technology export controls has been provided yet. According to China's state-run Xinhua News Agency, the move is part of the government's efforts to strengthen the management of technology exports and imports.

In December 2024, the United States announced semiconductor export controls that added certain high-bandwidth memory (HBM) products to its list of restricted items for export to China. In response, China immediately imposed export bans on dual-use items such as gallium, germanium, and antimony the following day, escalating the trade conflict.

This latest announcement is seen as China's strategic move to leverage its dominance in battery component manufacturing and critical mineral processing technologies amid President-elect Donald Trump's plans to escalate tariff conflicts with China.

China produces over 70% of the world's lithium batteries and accounts for 90% of the production of lithium iron phosphate (LFP) battery cathode materials.

With export restrictions expanding from anode materials to cathode materials, the United States and Europe are expected to become even more vigilant about battery energy security risks. South Korean companies are also likely to accelerate efforts to reduce their reliance on China within the battery supply chain by pursuing concrete diversification strategies.

The battery industry is expected to focus not merely on cost reduction but on ensuring supply chain stability. Given the current structure that relies on China—a key competitor—for intermediate and raw materials for cathode production, securing a stable supply chain has emerged as an even more critical challenge.

POSCO Future M has taken steps to secure stable resources through non-Chinese supply chains. To this end, the company signed a contract with POSCO Pilbara Lithium Solutions to purchase and supply 20,000 tons of lithium hydroxide for cathode material production.

Additionally, POSCO Future M plans to strengthen its technological competitiveness in high-nickel ternary cathode materials, its core product, and expand its product portfolio to include cathode materials for both low- and high-end electric vehicles. This strategy aims to meet the diverse needs of its customers.

The EcoPro Group is pursuing vertical integration of nickel, precursors, and cathode materials in Indonesia. As part of this strategy, the company plans to establish an integrated cathode material subsidiary in Indonesia and actively work on securing nickel resources.

An industry official stated, "As efforts to reduce reliance on China intensify, securing the stability of the battery material supply chain has become a critical challenge." They added, "The key lies in achieving sustainable competitiveness through diversification of the global supply chain."

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