SK’s Cliff Tactics… Kim Jong-hoon, a gladiator, “Battery business foldable”

In relation to the dispute over the infringement of electric vehicle battery trade secrets, SK Innovation, which was decided to lose the US International Trade Commission (ITC), was confirmed to have come out with an opinion to the effect that “we should also consider the plan to withdraw the factory in the US.” For the continued operation of the US plant, it is necessary to pay the settlement amount required by the winning LG Energy Solution and to weigh the cost of the loss of the existing investment due to the withdrawal of the business.

This opinion came from the audit committee held by the SK Innovation board of directors on the 10th. The board of directors held an audit committee on this day to receive reports from the management on ITC decisions and to prepare supplementary measures.

Chairman of the board of directors Kim Jong-hoon first criticized the ITC’s decision in the JoongAng Ilbo call the next day. If the ITC’s decision is overturned according to President Joe Biden’s Presidential Review or an agreement between LG and SK is not reached, SK will not be able to bring various items necessary for battery production to the United States. This is a sanction that could virtually stop the operation of the factory.

Regarding this, Chairman Kim said, “If you can’t run the factory for 10 years, you should just quit the business,” he said. He added, “If it were in Korea, there would have been criticism of public opinion that such an excessive disposition was given to companies.” He pointed out that he made a very big mistake that could lead to misunderstanding that it was a technology infringement such as deleting the related e-mail records. “The regret that the ITC, the agency, made such a decision, was the same as the management.”

Chairman Kim is an international expert who served as head of the trade negotiation headquarters of the Ministry of Foreign Affairs and Trade from 2007 to 2011. He was nicknamed’Gladiator’ while serving as the chief representative of the Korean side of the Korea-US Free Trade Agreement (FTA). In the 19th National Assembly (2012-2016), he was a member of the Saenuri Party (now the power of the people). When asked about the plan to negotiate with LG in the future, he first drew a line, saying, “Because I’m not the management team, I can’t figure out how much settlement money LG offered.” However, he stressed that “the principle of negotiation based on the interests of shareholders should not be shaken.”

Chairman Kim asked the reporter, “I built a factory in Georgia, US at a cost of 3 trillion won, and what would I do if I couldn’t operate it?” “As a member of the board of directors, we can clearly say,’What is the negotiation method that prioritizes the interests of shareholders?’ At that time, it is right to close the business.” “I gave the opinion to the management that we should discuss whether we give up the battery business itself or do business in a country other than the United States,” he said. Industry observations are that the settlement fund required by LG is in the range of 3 to 4 trillion won, and SK has offered a maximum of 1 trillion won.

In response to Chairman Kim’s opinion, it is analyzed that the board of directors empowered the management, saying,’Don’t be swayed by LG’s demands’ inside SK. It is interpreted as a’cliff edge tactic’ that raises concerns of President Biden by advocating the position that it will stop even if the business is abandoned.

On the other hand, LG also maintains a strong posture. Regarding concerns about the economic downturn in Georgia due to the disruption of the SK plant, an LG official said, “We are ready to do anything to help Georgia residents and workers.” LG Energy Solutions recently sent a letter in the name of President Kim Jong-hyun to the state senator, saying, “If an outside investor takes over SK’s Georgia plant, LG may participate as a partner in operating it.” In addition, LG announced that it will invest more than 5 trillion won in the US by 2025 and build two or more battery production plants independently.

Reporter Sunwook Choi [email protected]