SK hits a $ 1.eight billion settlement with LG that may save the Georgia plant

SK has started its second phase in Georgia.

Korean SK Innovation has agreed to pay 2 trillion won (about $ 1.8 billion) to rival electric vehicle battery maker LG Energy Solution to resolve the ongoing legal battle. This will allow SK to complete its $ 2.6 billion investment in Georgia, saving thousands of future jobs.

SK said it would pay LG Energy Solutions through a flat fee and ongoing license fee, and both parties withdrew all pending litigation and agreed not to bring any new claims for at least a decade.

SK said the clarity regarding the litigation would result in the Phase 1 plant being ramped up and a second adjacent plant being built faster. The companies said they had decided to “amicably” resolve their dispute for the benefit of the country’s environmental goals.

“Specifically, we will work together to strengthen a domestic EV battery supply chain and support the efforts of the Biden administration in the United States to advance green energy and environmental stewardship,” said Jun Kim, CEO and President of SK Innovation, and Jong Hyun Kim, CEO and President of LG Energy Solution, said in a joint statement.

The breakthrough came just in time: President Joe Biden had until Sunday to decide whether to overturn a decision by the International Trade Commission that SK imported batteries and components needed for US production for Had been banned for 10 years.

If SK had been left standing, even with carveouts, to serve large customers for the next two to four years, SK would have said the facility would have to be closed. SK announced it would initially create 2,600 jobs and later increased the promised amount to more than 5,000 as it argued further outside the U.S. sales agent’s office.

The 11th hour contract came about after weeks of stagnation in talks between the major Korean rivals and included the commitment of Georgian and US politicians at the highest level.

In a statement, Georgia’s US Senator Jon Ossoff said said that in the previous two weeks He “started” what seemed to be a dead end, arguing that reaching a friendly settlement would be better than continuing an expensive legal battle.

“When the future of the plant was in jeopardy, Senator Ossoff took the lead and helped us find a way forward. This successful outcome will lead to billions in investments in Georgia. The state is now positioned to be the nation’s leader in manufacturing batteries for electric vehicles, ”said Jun Kim, CEO of SK, in a statement.

Mr. Kim met with Mr. Ossoff for three hours in Washington on April 2. The new senator also met virtually with the managing director of LG Energy Solution, who was in Seoul.

Senator Raphael Warnock had also reportedly been in contact with the companies, particularly after the ITC’s original decision in February.

Governor Brian Kemp has also been kept informed of the situation given the personal interest he has shown in the investment. In 2019, he made his first overseas trip to Korea to meet with SK officials after announcing the state’s largest foreign investment project to date.

Mr Kemp had one final appeal to Mr Biden last week asking him to overturn the ITC ruling that led to the import ban. The governor said it would cause undue harm to the state’s workers while resetting the president’s own environmental agenda.

In a statement, the governor thanked those involved in the deal, with an emphasis on the office of US Trade Representative Katherine Tai and local business developers in Jackson County and the city of Commerce who have continued to advocate the work.

“Our state attracted this massive $ 2.6 billion investment due to Georgia’s growth-promoting leadership, and I have personally attended countless meetings, appeals, and other conversations to ensure this project and the 2,600 jobs expected continue move forward, “said the governor in a statement.

Pat Wilson, commissioner of the Georgian Ministry of Economic Development, said the state was “excited” about the news of the deal, pointing not only to the jobs saved but also to the momentum the announcement would add to Georgia’s ambitions to a hub to become EV manufacturing. Mr. Wilson also praised Korean Consul General Young-jun Kim and his team at the Atlanta Consulate for their dedication.

In its statement, SK commended both US Senators from Georgia, Mr. Kemp, the entire Georgian legislature, and local officials in Commerce and Jackson Counties.

Mr. Biden called the deal a “win” because a key part of his new infrastructure plan is “to have the electric vehicles and batteries of the future built in America by American workers across America”.

The deal saved Mr. Biden from making a tough call for the possible overturning of the ITC decision. Those lobbying on behalf of SK noted that the agent would do more than punish the company, it would set back green energy initiatives and expand China’s dominance in the critical sector by cutting key domestic manufacturing capacities.