(July 11): China’s goal of putting more electric cars on the road is proving a bonanza for a South Korean tycoon.
Huh Chin-kyu, the 77-year-old founder and chairman of Seoul-based Iljin Group, has become his country’s latest billionaire thanks to increasing demand for the firm’s copper coils, a key component of rechargeable batteries used in electric vehicles. The company’s Iljin Materials unit has posted a 15% jump in adjusted revenue since adding Warren Buffett-backed BYD Co, China’s biggest electric-carmaker, as a customer in 2015.
“Supplying to the number-one player in China for three years is a premium factor for Iljin,” said Han Byung-hwa, an analyst at Eugene Investment and Securities in Seoul. The company’s market value has quadrupled to about 2 trillion won (US$1.8 billion) since 2015.
Huh’s net worth, which also includes his family’s stakes in the firm’s other units, has swelled to US$1.1 billion, according to the Bloomberg Billionaires Index. An Iljin Materials spokesman declined to comment on the valuation.
China became the world’s largest market for electric vehicles in 2015, after sales there more than doubled. Global sales of new-energy vehicles, or NEVs, are expected to grow to 11 million in 2025 from 1.1 million last year, with China accounting for almost 50% of that total, according to Bloomberg New Energy Finance.
The Xi Jinping government will require Chinese automakers to earn NEV credits equivalent to 10% of annual sales starting next year, which could mean more business for Iljin.
The company is building a new copper foil plant in Malaysia that will expand its production capacity by 10,000 tons annually and help it supply other Chinese clients, including battery maker Contemporary Amperex Technology Co, Han said. Before acquiring BYD as a customer, Iljin Materials primarily catered to South Korean firms such as Samsung SDI Co, which supplies batteries to automakers including Volkswagen AG and BMW AG.
Huh, who studied metallurgical engineering at Seoul National University, started a small foundry in the front yard of his house in 1968 with 300,000 won investment. The company now has 45 affiliated units and combined revenue of 2.3 trillion won, according to the spokesman.
“If you want to make a small amount of money, go to medical school or law school,” Huh said at the company’s 50th anniversary celebration in January. “But if you want to make lots of money and contribute to the country’s development, go study engineering.”
Iljin drew headlines in 1989 when General Electric Co sued to stop the Korean company from using technology to mass produce industrial diamonds that GE claimed was stolen by a former employee. Iljin claimed GE was trying to force a competitor from the business by raising false allegations, but a U.S. jury ruled in favour of GE in 1993 and a judge later imposed a seven-year ban on Iljin making diamonds. The companies eventually reached a settlement, allowing Iljin to pay GE a licensing fee to continue production.
Huh was in court last year, after he was found to have hidden about US$13 million in an offshore shell company, according to local media reports. He was ordered to pay a fine of 700 million won and, according to the company spokesman, doesn’t plan to appeal the verdict.