South Korean automaker Hyundai Motor Group has reached a collaboration agreement with Korea Zinc, under which it will acquire a 5% stake in the metal smelting company.

This transaction will see Hyundai purchasing Korea Zinc’s shares for KRW527.2bn ($398.31m), at KRW504,333 apiece. It has also received the right to suggest one non-executive director to Korea Zinc’s board.

The duo entered a memorandum of understanding (MoU), which outlines the collaboration across the nickel value chain for its electric vehicle (EV) business.

Through the partnership, the two companies will conduct joint sourcing and processing of raw materials. This will ensure a stable supply of processed nickel and battery materials while also exploring new sources such as battery recycling.

In addition, the companies plan to work on establishing a stable nickel supply chain, which is a critical raw material in EV batteries. The aim is to jointly buy raw nickel materials and invest in mine development projects.

The MoU will support Hyundai’s aim of producing 3.6 million EVs by 2030, a plan that was unveiled in April this year. To support this, the manufacturer is prioritising the procurement of raw materials such as nickel and lithium.

It is also pursuing collaborations with several partners that specialise in procurement and processing of battery materials.

Korea Zinc formed a subsidiary to produce nickel sulphate in 2017, with a focus on serving EV manufacturers.

The partners expect to begin nickel supply in 2026. By 2031, the automaker aims to source at least 50% of its nickel requirements for EV batteries from Korea Zinc.