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EU probes Polish support for LG Chem's plant expansion

All News 09:40 August 12, 2020

SEOUL, Aug. 12 (Yonhap) -- The European Commission said it has launched an in-depth investigation into Polish support of 95 million euros (US$111.5 million) to South Korean chemical giant LG Chem over its expansion of its battery cell production facility for electric vehicles (EV) in Poland.

In 2017, LG Chem decided to invest more than 1 billion euros in the expansion of its production capacity of lithium-ion cells and battery modules and packs for electric vehicles in its existing plant in Wroclaw, southwestern Poland.

Last year, Poland notified the commission of its plans to grant public support for the expansion.

LG Chem's factory in Cheongju, North Chungcheong Province in South Korea (Yonhap)

EU antitrust chief Margrethe Vestager said EU state aid rules enable member states to foster economic growth in disadvantaged regions in Europe, but the EU needs to ensure that the aid is really needed to attract private investments to the region concerned, and avoid that the recipient of the aid gains an unfair advantage over its competitors at the expense of taxpayers.

"We will carefully investigate whether Poland's support was necessary to trigger LG Chem's decision to expand its existing cell production facility in Poland, is kept to the minimum necessary and does not distort competition or harm cohesion in the EU," Vestager said in comments posted on the website of the commission Tuesday.

The commission said it has doubts about whether LG Chem's decision to expand its battery production capacity in Poland was directly triggered by the Polish public support or whether the investment would have been carried out in Poland, even absent the public support.

The commission said granting aid in a context where a large company would have invested in any event would merely reduce the company's ordinary operating costs, which the commission says leads to competition distortions at the expense of taxpayers.

Currently, LG Chem has five battery plants in South Korea, China, the United States and Poland. LG Chem said it is on track to boost its production capacity to 100 gigawatt hours by the end of this year, which is enough to supply batteries for about 1.7 million electric cars.

LG Chem is a key supplier of batteries to electric vehicles, including those of GM, Ford, Renault, Volvo, Audi, Volkswagen and Daimler, as well as South Korea's largest carmaker, Hyundai Motor Co., and its smaller affiliate, Kia Motors Corp.

entropy@yna.co.kr
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