K-battery materials makers race to fill China's void with investments in Indonesia, Europe

South Korean battery materials makers are stepping up large-scale investments to expand production capacity, positioning themselves to capture market share as regulations on Chinese-made batteries tighten across North America and Europe and demand for electric vehicles and energy storage systems grows rapidly.

Ecopro Group launched a 1.2 trillion won ($804 million) fundraising drive Wednesday to finance investments in a nickel smelter in Indonesia and a manufacturing facility in Hungary. Ecopro BM, the group's cathode material unit, will issue 9.9 million new shares through a rights offering, with parent company Ecopro planning to subscribe for up to 120 percent of its allotted shares to support the capital raise.

L&F similarly raised funds last year through bonds with warrants (BW), securing a total of 300 billion won to invest in a new lithium iron phosphate (LFP) business. The 200 billion won public tranche drew 10.34 trillion won in subscriptions, setting a record for the largest BW public offering in South Korean history.

The push to raise capital reflects tightening restrictions on Chinese batteries in North America and Europe. The companies aim to build non-China supply chains at the right moment and scale up production to benefit from the regulatory tailwind in the battery market.

The EU is reducing its dependence on China for 34 critical raw materials — including lithium, nickel, cobalt, manganese, graphite and rare earths, 17 of which are designated strategic materials — through its Critical Raw Materials Act (CRMA). The bloc is also requiring domestic production through the Industrial Acceleration Act (IAA) and the EU-UK Trade and Cooperation Agreement (TCA).

In the United States, the One Big Beautiful Bill Act (OBBBA) designates foreign entities of concern — including those from China, Russia and North Korea — and restricts access to the Advanced Manufacturing Production Credit (AMPC) for manufacturers that use battery cells, modules or components produced in those countries, effectively supporting non-China supply chains.

Battery demand is also growing as regulations expand across North America and Europe. Global demand for EV cathode materials reached 1.056 million tons in the January–May period, up 18.2 percent from a year earlier, according to SNE Research. In markets outside China, demand totaled 425,000 tons, a 27.7 percent year-on-year increase. South Korean battery materials makers are moving to secure an early foothold in the fast-growing North American and European markets and capitalize on the regulatory shift away from Chinese suppliers.

Ecopro Group plans to allocate 765 billion won of the 1.2 trillion won to acquire a stake in the BNSI smelter in Indonesia, lifting its holding to 39 percent. The move targets 90,000 tons of nickel — enough to supply roughly 1.5 million electric vehicles.

Indonesia is one of the world's largest nickel producers, making the investment significant both for cost competitiveness and for building a non-China supply chain. The nickel-cobalt-aluminum (NCA) and related high-nickel batteries Ecopro focuses on account for 40 percent of an electric vehicle's total cost, and nickel alone makes up 40 percent of battery costs — meaning nickel procurement costs can determine the price competitiveness of batteries and, by extension, electric vehicles.

An additional 150 billion won will go toward the cathode material plant in Debrecen, Hungary, which began mass production last month. The facility operates three lines with an annual capacity of 54,000 tons of high-nickel nickel-cobalt-aluminum (NCA) cathode material. Ecopro BM also plans to add a dedicated nickel-cobalt-manganese (NCM) line, with the aim of deepening partnerships with battery cell makers and original equipment manufacturers (OEMs).

L&F is also expanding its domestic production capacity to reduce dependence on China. Its LFP subsidiary, L&F Plus, is set to begin full-scale mass production by the end of the third quarter. In addition, through its joint venture with LS Group, LS-L&F Battery Solutions, the company plans to build an NCM precursor production facility with an annual capacity of 40,000 tons.

The strategy extends LS Group's raw material procurement capabilities into secondary battery materials, pursuing vertical integration across the nickel sulfate–precursor–cathode material chain. The companies plan to strengthen cost competitiveness through vertical integration from raw material sourcing to production, while meeting major customers' demand for non-China materials.

"Demand for cathode materials outside China has been growing rapidly, but Chinese companies still hold an overwhelming share of supply," an industry official said. "Rather than simply expanding output, building a non-China supply chain and securing cost competitiveness will be what determines these companies' edge."