SEOULSHANGHAI, July 31 Reuters Chinese battery materials firms are ramping up investment in South Korea, announcing projects worth at least 4.4 billion this year to try to meet U.S. electric vehicle EV tax credit rules aimed at lowering reliance on China39;s supply chains.

Five battery materials plants worth about 5.6 trillion won 4.4 billion in total have been announced this year by Chinese companies and local partners in South Korea, including battery firms POSCO Future M and SK On, according to a Reuters review of project announcements.

The deals follow the introduction of the U.S.39;s Inflation Reduction Act IRA, which requires at least 40 of the value of critical minerals used in an auto battery to be sourced from the United States or a free trade partner to qualify for a 3,750 tax credit per vehicle.

The IRA, designed to wean the U.S. off the Chinese supply chain for electric vehicles EVs, will also eventually bar tax credits if any EV battery components were manufactured by a foreign entity of concern, a provision aimed at China.

South Korea has a freetrade agreement with the United States that would likely make batteries manufactured in the North Asian nation and later installed in U.S.manufactured electric cars eligible for the federal tax credits.

But Kang Dongjin, an analyst at Hyundai Motor Securities, cautioned that setting up South KoreaChina JV battery firms could become more complex, as the U.S. Treasury Department has not yet provided a concise…

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