China’s billionaire cathode battery manufacturer targets US market through South Korea IPO

A Chinese billionaire, who controls an important part of the battery supply chains, is in discussions to list a portion of his empire in South Korea. This could help his company sell and invest in the US in spite of Joe Biden’s policies to reduce reliance on China.

Bai Houshan’s Shanghai-listed Ronbay Technology is rapidly expanding in South Korea and dominates a large part of the global high-nickel electrode market.

Three people with knowledge of the situation say that the company is considering plans to separate its Korean operation from its Shanghai entity to avoid tariffs up to 25% on Chinese components and to access subsidies under Washington’s Inflation Reduction Act.

According to a presentation viewed, the company told investors it was considering an IPO in South Korea within the next two-years to avoid the “crisis”. The company declined comment.

The plans of Bai to split his company, which will have revenues exceeding $4bn by 2022, show how companies are reorganizing and exploring new licensing arrangements and partnerships in response to the growing US/China tension.

Biden has pledged hundreds of billions in subsides for the US to increase domestic manufacturing and reduce its economic dependence on China.

According to the law, consumers are not eligible for generous tax credits if they purchase components from China or other so-called foreign entities.

According to Bernstein data, Ronbay’s Chungju factory, located in the landlocked Korean Province of North Chungcheong produces high-nickel materials. It holds a third share of the global market for this product.

In a filing to the stock exchange in March, the firm stated that it did not believe that the shipments coming from its South Korean plant fell under the prohibitions of new US laws.

Separate disclosures made over the last two weeks indicate that the company intends to raise 5.42bn (about 750mn dollars) via a new stock issuance in Shanghai to fund its Korea expansion. The company has signed a Memorandum of Understanding with a “Japanese or Korean” firm to sell 100,000 tons of high-nickel materials for the North American market.

Ronbay’s strong position on the market reflects Chinese dominance in scores of materials, products and services critical to the transition to cleaner energy systems around world, including electric cars, batteries, solar panels, wind turbines, and other renewable energies.

The Biden administration will likely define more clearly what a “foreign concern” is in the coming weeks. This could limit Chinese investment and the use components made in China for the US clean tech sector.

One person who is familiar with Ronbay’s plans said that the timing of the sale of Korean shares will depend on the decision.

The world’s largest battery manufacturer, China’s CATL , , , , , signed , a deal with Ford in February to license its technology to be used in Ford’s $3.5bn Michigan plant.

The Ford-CATL agreement has met with resistance from US Republicans. Marco Rubio, a Florida senator, said that the deal “will deepen US dependence on the Chinese Communist Party for battery technology”.

Chinese battery companies formed a number of alliances with counterparts from US free-trade partner countries. This includes South Korea, home to many of the top battery manufacturers in the world, such as LG and Samsung.

This year, the Korean battery manufacturer SK On as well as materials producer EcoPro partnered up with China’s GME Resources in order to produce battery components for South Korea. Meanwhile, LG and Posco both partnered up with Zhejiang Cobalt. Posco announced a $1.2bn joint venture with China’s CNGR Advanced Material in June.

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