POSCO Future M Co., South Korea’s leading battery materials maker, is set to manufacture spherical graphite – a critical material for battery anodes – in a strategic pivot to reduce its dependence on Chinese suppliers and fortify its electric vehicle battery supply chain.
After a board meeting on Tuesday, the affiliate of Korea’s top steelmaker POSCO Holdings Inc. said it will establish a new subsidiary, tentatively named Carbon New Materials Co., to oversee the production of spherical graphite.
POSCO Future M’s board has approved a 396.1 billion won ($277 million) investment for the construction of the production facility, although a final decision on the plant’s location has yet to be made.
The move marks the first major step by a Korean battery materials producer to localize production of spherical graphite, which is currently 100% imported from China.
POSCO Future M plans to integrate the new material into its anode, the negative end of a lithium-ion battery, manufacturing process at its Sejong plant, thereby internalizing a key step in the battery value chain.
Graphite, known for its high energy density and thermal stability, is a vital component in lithium-ion battery anodes used in electric vehicles. Natural graphite extracted from mines requires intensive processing due to impurities and irregular particle shapes. It must be refined into high-purity spherical graphite before being used in anode production.
THREAT OF EXPORT CONTROLS BY CHINA
South Korea currently relies entirely on Chinese imports for both natural and spherical graphite.
This dependence has raised alarms across the industry amid growing geopolitical tensions and the threat of export controls by Beijing.
POSCO Future M’s new initiative is widely viewed as a hedge against such risks and a crucial milestone in reshaping the regional battery ecosystem.
Alongside the domestic push, POSCO Future M is also seeking to diversify its upstream supply of natural graphite.
The company inked an agreement in March 2024 with Australia-based Syrah Resources Ltd., which operates the Balama graphite mine in Mozambique, which holds one of the world’s largest graphite reserves.
MOVE TO QUALIFY FOR THE US IRA
The move is also part of its efforts to qualify for tax incentives under the US Inflation Reduction Act (IRA).
POSCO Group is also known to be exploring additional investment opportunities in overseas natural graphite assets to further dilute its reliance on Chinese sources.
“By sourcing natural graphite from countries outside China and producing spherical graphite domestically, we can establish a fully independent anode material value chain, a critical step in de-risking our battery operations,” said a POSCO Future M official.
The development aligns with broader national and international efforts to build resilient, China-independent supply chains for key energy transition technologies, including batteries and critical minerals.
Analysts said POSCO Future M’s decision could prompt similar moves from other players in the sector as the global race for clean energy materials intensifies.
By Sang-Hoon Sung
uphoon@hankyung.com
In-Soo Nam edited this article.
