Environment ministry approves trillion-won fund for AI manufacturing and batteries

The environment ministry on Thursday approved about 1 trillion won in low-interest loans for five strategic projects aimed at accelerating South Korea's transition to artificial intelligence-driven manufacturing and strengthening its electric vehicle supply chain.

The September meeting of the Fund Operation Council greenlit the total to support mid-sized companies developing core technologies in precision machinery and battery components.

Among the beneficiaries is DN Solutions, which will receive a 200 billion won loan comprising 150 billion won from the Advanced Strategic Industry Fund and 50 billion won in private capital. The company plans to invest 224 billion won to build a new R&D center dedicated to advancing AI-controlled smart machine tools.

DN Solutions holds the top domestic market share and ranks third globally in metal cutting machines but faces stiff competition from Japanese firms in the ultra-precision sector. The new facility will focus on developing technology that uses sensors to collect real-time data on vibration, temperature and current, enabling equipment to self-correct errors before they affect product quality.

Identified through a joint committee on growing enterprises, the project serves as a key example of spreading AI factory capabilities across the manufacturing base. The resulting AI smart machines are scheduled for demonstration and mass production at the company's facility in Changwon, South Gyeongsang Province.

In the electric vehicle sector, the council approved a 25 billion won loan for Hwasin to expand its production line for battery pack cases. The company applied for the funding to cope with increased production of electric models by domestic automakers, with the total investment for the new line reaching 32.3 billion won.

Battery pack cases protect cells from external shocks and ensure vehicle safety through lightweight design. Hwasin utilizes differentiated technologies such as friction stir welding to minimize thermal deformation.

The broader National Growth Fund has approved a cumulative 18.9 trillion won across 35 cases by the end of September, with regional projects accounting for 44.7 percent of the total volume. Officials projected that the fund would reach its annual target of 30 trillion won in approvals ahead of schedule when fourth-quarter indirect investment figures are included.

The Risk Management Committee and Post-Management Committee are set to begin full operations in October, subjecting even projects approved prior to September to post-investment reviews.