Korean firms scurry to expand nickel, lithium supply chains

South Korea’s leading companies such as SK, POSCO, LG and LX are scurrying to expand their supply chains for lithium and nickel, key raw materials for electric vehicle batteries, into the US, Canada, Australia, Indonesia and Argentina. 

In the face of resource nationalism and China’s growing influence in the metals market, they are keen to diversify their suppliers and secure a steady supply of battery minerals.

POSCO Holdings Co. on Thursday signed a memorandum of understanding (MOU) with China’s resources trading and mining company Ningbo Liqin to build a nickel plant in Indonesia by 2025, the Korean company said on Friday.

The two companies are set to produce 60,000 tons of nickel per year in the world’s largest nickel-producing country. The amount will be enough to manufacture batteries to power 1.2 million EVs.

POSCO also plans to build a nickel refining plant in New Caledonia by the second half of this year. Once completed, the facility will have the capacity to refine 20,000 tons of nickel per year.

In Australia, the steelmaker acquired a 30% stake in the nickel mining and refining company Ravensthrope Nickel Operation for $240 million in 2021.

Under the deal, POSCO will be receiving 7,500 tons a year of mixed nickel-cobalt hydroxide precipitate (MHP) produced at Ravensthorpe from 2024.

LITHIUM

POSCO is also strengthening its supply chain of lithium, dubbed “white petroleum.” It has been in a lithium supply contract with Australian mining firm Pilbara Minerals since 2018.

The same year, it acquired a salt lake in Argentina with lithium reserves for $280 million.

Near the lake, POSCO is building a lithium hydroxide plant with an annual production capacity of 25,000 tons. It is scheduled for completion in the first half of 2024.

Earlier this month, it signed an MOU with Australia’s Jindalee Resources Ltd. to produce lithium in the US.

It aims to produce 220,000 tons of nickel and 300,000 tons of lithium by 2030, by when it looks to be the world’s top player in the EV battery materials market from raw materials procurement to the production of battery materials.

SK GROUP

SK On Co., a battery manufacturer, bought a 10% stake in Australian miner Lake Resources NL in 2022. It also signed a long-term contract to procure lithium from the company.

In November of last year, SK signed an MOU with Korean energy materials producer EcoPro Co. and Chinese precursor producer GEM Co. to jointly build a nickel intermediate plant in Indonesia. The plant is scheduled to come online next year.

The same month, it inked a five-year deal to buy 57,000 tons of lithium hydroxide from Chilean chemical company SQM.

LG Chem Ltd. and LG Energy Solution Ltd. are at the forefront of the group’s efforts to secure nickel and lithium.

On Feb. 17, LG Chem signed a contract to buy 200,000 tons of lithium from a US miner Piedmont Lithium Inc.

Last year, LG Energy inked a US minerals company Compass Minerals International Inc. to secure 11,000 tons of lithium carbonate for six years starting in 2025.

LX International Corp. of the LX Group is also looking to invest in nickel mines in Indonesia.

Those moves come after Mexico, the world’s 10th-largest lithium-producing country, nationalized its lithium resources.

Chile, Argentina and Bolivia, which account for 60% of lithium reserves in the world, are preparing to establish an OPEC-style cartel.

For its part, Indonesia has decided to limit its nickel supply to companies with plants in its country and prohibits the export of nickel ore.
 
Another threat to Korean battery materials makers is China's emergence as the world’s largest producer of lithium compounds after snatching up lithium mines in South America, Australia and Africa.

Write to Ik-Hwan Kim at lovepen@hankyung.com

Yeonhee Kim edited this article