South Korea’s SK Takes Stake in Key Supplier to China’s Electric Car Industry

SK Holdings Co. Ltd. said it has invested about $239 million in a Chinese company that manufactures a key metal for electric-vehicle batteries, a move to tap the country’s booming new-energy vehicle sector.

The investment makes the South Korean conglomerate the second-largest shareholder in Lingbao Wason Copper-Foil Co. Ltd., SK announced Tuesday.

Founded in 2001, Henan-province-based Lingbao is China’s leading manufacturer of copper foil — an integral metal component for batteries that power electric vehicles (EVs). Lingbao has a broad customer base that includes domestic battery giants BYD Co. Ltd. and Contemporary Amperex Technology Co. Ltd. (CATL), as well as foreign competitors such as Japan’s Panasonic Corp.

For SK, whose businesses include energy and semiconductors, the investment represents its latest step into the Chinese market, where demand for EV batteries has boomed due to the government’s relentless efforts to shift consumers away from gasoline-powered cars.

SK expects EVs will become more mainstream in the years ahead, which it said will enable the global market for copper foil to grow by more than 30% annually until 2025.

China has been the world’s largest EV market since 2015, with this year’s sales set to surpass 1 million vehicles, according to analyst forecasts.

As carmakers rush to ramp up production, business has boomed for upstream companies — including battery-makers and those providing metal materials. Last year, Lingbao reported an operating profit of around 380 million yuan ($54.7 million) on revenue of 2 billion yuan, according to data provided by SK.

CATL — which went public in Shenzhen earlier this year — and Shenzhen-based BYD are China’s top two players in the battery sector, with foreign companies such as LG Chem Ltd. and Samsung SDI Co. Ltd. trying to play catch-up.

Contact reporter Mo Yelin (yelinmo@caixin.com)