South Korea has banned the supply of batteries for electric vehicles to Russia

South Korea, following the EU, has banned the supply of lithium-ion batteries for electric vehicles to the Russian Federation. The largest Korean supplier of such batteries to Russia was Enertech, which has been under the control of Rosatom since 2022. A ban on supplies could create difficulties for the ongoing operation of the state corporation’s assembly sites in Russia, which use Korean cells. The ban will be a trigger for investment in developments, analysts say, noting that South Korean authorities may grant permission for supplies to certain organizations.

The South Korean authorities have banned the supply of lithium-ion batteries to the Russian Federation as part of the expansion of sanctions. We are talking about all rechargeable batteries, including batteries for electric vehicles, follows from a statement by the country’s Ministry of Trade. South Korea traditionally duplicates new restrictions from Western countries. The European Union banned the export of batteries to the Russian Federation in the 12th package (published in December 2023).

Nextons Tax and Customs Practice Advisor Vladislav Safonov notes that the Korea Trade and Industry Security Agency (KOSTI) has prepared and published “quite detailed guidance on the application of the restrictions in question.” As follows from the explanations of KOSTI (“Kommersant” studied the document), customs codes related to both finished lithium-ion batteries and their components are subject to customs control.

The main supplier of lithium-ion batteries of all types, including portable ones, in the Russian Federation is China. Judging by Chinese customs statistics, the Russian Federation received a total of $315.2 million worth of batteries in 2023. South Korea supplies much less: in 2023, $18.4 million worth of batteries weighing 322.8 tons were supplied from the republic to the Russian Federation, and their components – worth $8.6 million, weighing 184.6 tons, according to data from Korean customs statistics.

However, the ban on the supply of batteries from South Korea may be sensitive for Renera (controlled by TVEL, the fuel division of Rosatom). The main South Korean supplier of lithium-ion batteries to Russia is Enertech, which ships batteries to Renera, Kommersant sources familiar with customs statistics say. In 2023, the volume of supplies amounted to at least 1.5 billion rubles. Enertech has been under the control of Renera since 2022, which increased its share to 98.32% in 2022 (see Kommersant of May 15, 2023).

Enertech is a relatively small plant with a capacity of 150 MWh with its own R&D center. The company is developing quite advanced NMC (lithium-nickel-manganese-cobalt-oxide) battery technology. TVEL did not comment.

Now Renera is bringing cells and modules from the Korean plant for further assembly in the Russian Federation. Batteries assembled from Korean cells already have the “made in Russia” status, since the state corporation in the summer of 2023 entered into a special investment contract (SPIC) for the construction of a gigafactory with a capacity of 4 GWh per year (50 thousand batteries) in the Kaliningrad region. The launch of the factory and production of batteries is planned for the fall of 2025. In addition, Renera has an assembly site for 150 MWh at the Moscow Polymetal Plant and on the territory of the Technopolis Moscow economic zone for 320 MWh.

In September 2023, it became known that Renera was starting to build another gigafactory with a capacity of 4 GWh per year in the settlement of Krasnaya Pakhra in the Trinity Administrative District. The Moscow City Hall reported that Renera entered into a contract with the State Unitary Enterprise Mosgortrans for the supply of more than 155 thousand traction batteries for electric buses and Moskvich electric vehicles. Initially it was assumed that there would be a competition for this contract, but as a result the tender did not take place. Rosatom also has its own plans for the production of transport: in 2022, Renera acquired for 6.2 billion rubles. share in JSC Kama, which plans to produce Atom electric vehicles.

Dmitry Babansky from SBS Consulting believes that restrictions should become a trigger for investment in R&D on battery components. He also notes that, in theory, it is possible to maintain some supplies from Korea through third countries. At the same time, Kommersant’s interlocutors in the industry remind that the South Korean authorities can give permission to a Korean organization, as an exception, to supply goods from the sanctions list to the Russian Federation, provided that it does not have dual-use status.

Polina Smertina, Olga Nikitina