Korean firms urged to invest in Canada to comply with US IRA

The implementation of the U.S. Inflation Reduction Act (IRA) could be a significant opportunity to enhance business partnerships between Korea and Canada, lawyers from both countries said at a forum co-hosted by the Korea Trade-Investment Promotion Agency (KOTRA) and the Canadian Chamber of Commerce in Korea (CanCham Korea), Thursday.

The legal experts especially advised carmakers and battery firms here to take advantage of the North American country’s rich deposits of critical minerals for electric vehicles (EVs).

Frank Sur, a partner at Canadian law firm Gowling WLG, introduced Canada as one of the most optimal places for Korean firms to source critical minerals to make EV batteries, given that the country has signed a free trade agreement (FTA) with the U.S. and it is a source for all five critical minerals needed for EVs: nickel, cobalt, lithium, manganese and graphite.

The IRA provides a tax credit to U.S. consumers who purchase EVs that undergo final assembly in North America. All vehicle battery components must be manufactured or assembled in North America, and their critical minerals must be sourced from the U.S. or countries that have free trade agreements with the U.S.

“The U.S. is not going to abandon the IRA,” Sur said.

The Korean Canadian lawyer said that it is time to invest in Canada, which has competitiveness not just in mining, but also in infrastructure, manufacturing and recycling. Mentioning LG Energy Solution’s partnerships signed in September with Canadian battery materials suppliers, he expected more deals to come between the two countries’ companies.

Pak Hyo-min, a partner at one of Korea’s major law firms, Shin & Kim, said that the IRA marks an effort of the U.S. government to reshore manufacturing there.