The “One Big Beautiful Bill Act (OBBBA)” which went into force after it was signed by U.S. President Donald Trump, has made Korean companies stand on the guard due to curtailment and early termination of subsidies caused by the act.
But LG Group has been moving differently from other Korean companies.
LS Cable & System has seen less investment uncertainties, and battery subsidiary companies of the business group are breathing a sigh of relief and exploring replacement businesses.
LS Group Chmn. Koo Jae-eun’s “ambidextrous strategy” has paid off to some extent.
LS GreenLink, LS Cable & System’s U.S. operation, has recently secured 136.6 billion won in tax credits under the Qualifying Advanced Energy Project.
The company’s plan to build a submarine cable plant hit a snag, as it has been excluded from curtailment targets of the OBBBA.
The Qualifying Advanced Energy Project Credit (48C) was originally established by the American Recovery and Reinvestment Act of 2009 and subsequently renewed and expanded under the Inflation Reduction Act of 2022 (IRA).
LS Cable & System is building the world’s largest capacity undersea cable plant in Chesapeake, Virginia, at a cost of about 1 trillion won.
The company began to mass produce high-voltage direct current undersea cables in 2028.
LS C&S is zeroing in on the North American off-shore wind power market.
The U.S. administration’s plan to expand offshore wind power to 30GW by 2030 is likely to make the North American undersea cable market in a short supply, serving as an opportunity for LS C&S.
A bird’s eye-view of a submarine cable plant being built by LS GreenLink.
LS ELECTRIC, which saw overseas sales top 50 percent last year, has a lot of factors to consider.
Even though its overseas revenues surpassed 50 percent, the latest redesign of the IRA has raised uncertainty.
In particular, the company now has to tackle a 25 percent tariff risk.
All transformers, produced in Korea and exported to the United States by LS ELECTRIC, are hit by the U.S. administration’s tariff policies against imports from China and other countries.
The company also suffers from unit price pressure caused by copper price hikes. Copper is an essential core raw material in the production of transformers and power systems.
The battery business has hit hard times. The Section 45X Advanced Manufacturing Production Credit has been retained, but conditions prohibiting the use of Chinese-produced raw materials have been strengthened.
As a result, Korean battery makers have been scurrying to decouple supply chains from China, so LS ELECTRIC is now under pressure to follow suit.
Things are going different in the material industry.
The strengthening of the FEOC (Foreign Entity of Concern) regulations that exclude Chinese-sourced materials may serve as an opportunity for LS ELECTRIC. FEOC regulations target China, Russia, North Korea and Iran.
EV cars loaded with batteries using mineral resources extracted and fabricated by the related countries are excluded from U.S. tax credits.
As 90 percent of precursors depends on China, the FEOC regulations may raise non-Chinese made precursor demand.
LS-L&F Battery Solutions (LLBS), a joint-venture company between LS ELECTRIC and L&F, set up a precursor plant in Saemangeum, Jeollabuk-do and began to put it in a trial operation in May.
LS MnM, a non-ferrous metal affiliate of the business group, is also on the move.
The company plans to establish nickel sulphate production lines in Ulsan and Saemangeum by investing 2 trillion won.
The goal is to raise its annual production capacity to 62,000 tons by 2029. That capacity is enough to meet nickel sulphate demand for the production of 1.25 million EV units.
The company now seeks to strike deals to supply mineral resources from countries like Indonesia other than China to comply with the FEOC regulations from the stage of securing raw materials.
LS Cable & System has continued to invest in the United States amid the controversial termination of the IRA regulations.
LS ELECTRIC has been diversifying to ESS, EV parts and battery materials. The companies have mixed feelings and reactions.
LS Group Chmn. Koo has stressed “Vision 2030,” calling for nurturing power, battery and EV parts, saying that the electric infrastructure is an opportunity for LS in the AI era.
Public limelight is on whether Koo’s ambidextrous strategy may lead to a sustainable growth of the business group by overcoming volatile U.S. policy risks.
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