Korea’s SK Innovation has agreed to pay 2 trillion won (about $1.8 billion) to rival electric vehicle battery maker LG Energy Solution to settle their ongoing legal dispute, a move that will allow SK to finish out its $2.6 billion investment in Georgia and save thousands of future jobs.
SK said it would pay LG Energy Solutions via a lump sum and an ongoing royalty, and both parties withdrew all pending legal disputes and agreed not to launch new claims for at least a decade.
SK said the clarity around the legal disputes would result in ramping up its phase-one plant and building a second adjacent one more quickly. The companies said they had decided to mend their dispute “amicably” for the good of the country’s environmental goals.
“In particular, we will work together to strengthen an EV battery domestic supply chain and support the U.S. Biden Administration’s effort to advance green energy policies and environmental responsibility,” 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 the nick of time: President Joe Biden had until Sunday to decide whether to overturn an International Trade Commission ruling that had barred SK for importing batteries and components needed for U.S. production for 10 years.
If allowed to stand, even with carveouts to serve large customers over the next two to four years, SK had said the plant would have had to shutter. SK said it would create 2,600 jobs initially, and later upped the eventual promised total to more than 5,000 as it continued to make its case before the U.S. Trade Representative’s office.
The eleventh-hour deal came after weeks of stagnation in the talks between the large Korean rivals and involved engagement from the Georgia and U.S. politicians at the highest levels.
In a statement, Georgia’s U.S. Sen. Jon Ossoff said that over the two preceding weeks he “jumpstarted” talks that seemed to be at an impasse, making the case that a mutually agreeable settlement would be better than continuing an expensive legal fight.
“When the future of the plant was in jeopardy, Sen. Ossoff provided leadership and helped us achieve a path forward. This successful outcome will lead to billions more in investment in Georgia. The state is now positioned to be the nation’s leader in electric vehicle battery production,” SK CEO Jun Kim said in a statement.
Mr. Kim met with Mr. Ossoff for three hours in Washington April 2. The new senator also met virtually with LG Energy Solution’s chief executive, who was in Seoul.
Sen. Raphael Warnock had also been reportedly been in contact with the companies, especially in the aftermath of the original ITC decision in February.
Gov. Brian Kemp was also continually apprised of the situation, given the personal interest he has staked on the investment. In 2019, he made his first overseas trip to Korea to meet with SK officials after they announced the state’s largest foreign-investment project to date.
Mr. Kemp had sent a final appeal to Mr. Biden last week asking him to overturn the ITC ruling that resulted in the import ban. The governor said it would do undue harm to the state’s workers while setting back the president’s own environmental agenda.
In a statement, the governor thanked those involved in the settlement, with a particular emphasis on the U.S. Trade Representative Katherine Tai’s office and the local economic developers in Jackson County and the city of Commerce, who continued to advocate for the plant.
“Our state attracted this massive $2.6 billion investment because of Georgia’s pro-growth leadership, and I have personally participated in countless meetings, calls, and other conversations to make sure this project and the 2,600 expected jobs continued to move forward,” the governor said in a statement.
Pat Wilson, commissioner of the Georgia Department of Economic Development, said the state was “ecstatic” over the news of the settlement, pointing to not only the jobs saved but also to the momentum the announcement will give to Georgia’s ambitions of becoming a hub for EV manufacturing. Mr. Wilson also praised Korean Consul General Young-jun Kim and his team at the consulate in Atlanta for their involvement.
SK in its statement praised both U.S. senators from Georgia, Mr. Kemp, the entire Georgia state legislature and local officials in Commerce and Jackson County.
Mr. Biden called the deal a “win,” given that a centerpiece of his new infrastructure plan is “to have the electric vehicles and batteries of the future build her in America, all across America, by American workers.”
The deal spared Mr. Biden from having to make a tough call on potentially overturning ITC ruling. Those lobbying on SK’s behalf noted that the remedy would punish more than just the company, but it would also set back green-energy initiatives and extend China’s dominance in the critical sector by cutting crucial domestic manufacturing capacity.