South Korean battery equipment makers are responding to the expansion of orders from Swedish battery maker North Volt. The main goal is to jointly receive financial support necessary for equipment export.
According to the industry insiders Northvolt is considering a plan to give orders to South Korean battery equipment companies through the Japanese trading company, DJK Group. When South Korean battery equipment makers form a consortium, DJK Group will be responsible for the financial export costs of these companies. It is expected that several assembly and post-processing equipment companies will participate in the consortium, including CIS, an electrode process equipment company. DJK Group would collect a certain level of commission.
The reason for the formation of the consortium of South Korean battery equipment makers is that the number of Northvolt orders has increased. You need a certain amount of cash to export equipment. Taking this into account, if the contract volume is large, orders (PO) are divided into several orders. If the ordering timing overlaps, it may be difficult to export due to insufficient cash flow. This problem can be solved if the DJK group makes guarantees.
Some point out that if the government would be more supportive, the DJK group would not need to intermediate. An industry insider said, “If the DJK Group collects fees in the middle, it is not good for Northvolt or South Korean equipment makers,” and said, “The more Northvolt orders, the more the DJK Group will benefit.”
The Korean government has provided project financing (PF) worth 100 million dollars (approximately 1188 billion won) to Northvolt from the Export-Import Bank of Korea. However, this funding was part of financing round that North Volt participated in when it raised 1.6 billion dollars of financing from foreign financial institutions such as European Investment Bank and BNP Paribas. This was the money needed to invest in Northvolt batteries producing capacities.
Northvolt will carry out a 20 gigawatt hour (GWh) battery expansion project over two years through a joint venture with Volkswagen. It plans to expand the battery production capacity to 150GWh by 2030.