GWANGYANG, SOUTH JEOLLA – POSCO Future M Co., South Korea’s leading battery materials maker, has secured a China-free cathode material supply chain after completing a new precursor plant in the southern port city of Gwangyang, the company said on Tuesday.
The plant, with an annual capacity of 45,000 tons – enough to power approximately 500,000 electric vehicles – marks a key milestone in the company’s efforts to reduce reliance on Chinese suppliers and fortify its position in the global electric-vehicle battery market.
The facility sits on a land of 22,400 square meters within the company’s existing cathode production campus in the seaside city in South Jeolla Province. It will produce precursors for high-nickel cathodes to be exported to Ultium Cells LLC, a US battery manufacturing joint venture between General Motors Co. and LG Energy Solution Ltd.
Precursors – chemical compounds containing key metals such as nickel, cobalt and manganese – are essential materials used in producing cathodes, making up nearly 70% of cathode’s raw material costs.
They play a key critical role in determining the quality and performance of the cathode material, and more than 90% of the precursors used in cathode production in Korea were imported from China as of March, according to SNE Research.
With this new plant, POSCO Future M expects it will be able to significantly reduce its reliance on Chinese suppliers and improve its global competitiveness.
“This facility allows us to build a fully independent supply chain for battery materials,” POSCO Future M President Eom Gi-chen said during the opening ceremony on Tuesday.
The move is also expected to enhance POSCO Future M’s eligibility for US tax credits under the Inflation Reduction Act (IRA), which excludes battery materials sourced from “Foreign Entities of Concern” (FEOCs), including China.
POSCO BYPASSES CHINA FOR KEY BATTERY MATERIALS
POSCO Future M operates cathode material production sites at home and abroad. From its plants in Pohang and Gwangyang, it can domestically churn out 150,000 tons of cathodes in total annually.
It also produces an additional 25,000 tons of cathodes from its manufacturing joint venture with Huayou in China and 30,000 tons via Ultium CAM, its JV with GM in Quebec, Canada.
It plans to ramp up its total cathode output to 395,000 tons by 2026.
With the Gwangyang precursor facility, POSCO Future M is now capable of producing 85,000 tons of precursors worldwide.
The company sources high-purity nickel sulfate from its parent, Korea’s top steelmaker POSCO Holdings Inc., which procures nickel from countries such as the Philippines.
The steelmaking group also sources other battery materials from outside of China.
It produces lithium carbonate, the raw material for lithium hydroxide, from a salt lake in Argentina, owned by the group since 2018.
POSCO Holdings acquired stakes in a lithium ore mine in Pilbara, Australia, in 2018, and in 2021 formed a JV called POSCO Pilbara Lithium Solution, which processes lithium ore into hydroxide.
The group also operates an electrode material factory run by POSCO Future M and a battery recycling factory under POSCO HY Clean Metal, contributing to its broader goal of creating a China-free supply chain for battery materials.
POSCO Future M has invested 340 billion won ($249 million) to build the Gwangyang precursor plant since breaking ground in December 2022.
By Jin-Won Kim
jin1@hankyung.com
Sookyung Seo edited this article.
