POSCO to spend $900 mn to expand lithium, cathode output in Korea

South Korea’s steel giant POSCO Group is expected to spend 1.2 trillion won ($900 million) in total to add cathode manufacturing and lithium refining facilities in Gwangyang to bump up core electric vehicle battery materials' output amid surging demand.

According to sources in the EV battery materials industry, POSCO Holdings Inc., the holding company of the Korean steel giant, recently decided to buy a 479,000-square-meter land in the Yulchon Industrial Complex in Gwangyang, South Jeolla Province, from Hanla IMS Co. for 120 billion won. 

The two parties are in final discussions for the deal, and POSCO Holdings will find another plot if they fail to agree on terms. 

On the new land, POSCO Holdings and its battery materials producing unit POSCO Future M Co., formerly POSCO Chemical, plan to build a new lithium refining plant to produce 25,000 tons of lithium and a cathode production facility with a capacity of 60,000 tons, respectively, by 2025.

Once the two facilities are completed, POSCO Holdings will have a total of three lithium refining plants in Gwangyang, and POSCO Future M's total cathode production capacity from its two plants in the industrial park will jump to 150,000 tons, enough to power 1.87 million electric cars. 

POSCO’s latest investment in EV battery materials production ramp-up will turn the reclaimed land facing the seawall around the Gwangyang Steelworks into the group's EV battery materials production cluster, making it easier for the group to source key EV battery ingredients and more efficient for it to produce them.  

With the new Gwangyang plants, the Korean steel giant can more effectively deal with burgeoning demand for EV battery materials amid the ongoing global EV boom and also with the US Inflation Reduction Act (IRA), which gives huge benefits to EV makers and suppliers of EV components and battery materials.

CATHODE OUTPUT RAMP-UP TO 150,000 TONS IN GWANGYANG

POSCO Future M currently churns out 90,000 tons of cathodes from its existing plant in Gwangyang, the world’s biggest single cathode-producing site, which accounts for the lion’s share of the company’s 105,000 tons of cathode production at home and abroad.

Once the new plant is built, the company's total cathode production from the Yulchon Industrial Complex will jump to 150,000 tons, nearly half of its global cathode output target of 345,000 tons by 2025.

It recently broke ground for a 30,000-ton high-nickel cathode plant in Pohang, where the steel giant’s headquarters and main steel mills are located, and plans to build another 30,000-ton cathode plant there. 

It also plans to set up a cathode plant in China and another one in Canada, each with an annual production capacity of 30,000 tons.

POSCO Future M has set a goal to produce a total of 610,000 tons of cathodes by 2030.

EASY ACCESS TO LITHIUM WITH NEW REFINING PLANTS

The new investment will also turn Gwangyang into POSCO’s local hub for lithium refining.

POSCO sources lithium mainly from Australia and Argentina.

POSCO Holdings' joint venture with Australia’s lithium miner Pilbara Minerals Ltd., POSCO-Pilbara Lithium Solution, is currently building a lithium refining plant in Gwangyang, where 43,000 tons of lithium hydroxide are expected to be produced.

Demand for lithium hydroxide as a key raw material for high-nickel cathodes is rapidly growing because its mix with nickel boasts higher energy density and better charge-discharge performance.

POSCO HY Clean Metal, a POSCO Holdings joint venture with China’s Zhejiang Huayou Cobalt Co., is currently constructing another lithium refining plant in Gwangyang to recover and refine lithium from waste batteries. The plant is expected to churn out 12,000 tons of nickel, lithium and cobalt annually.

The construction of both lithium refining plants is slated to be completed this year. 

POSCO plans to refine saltwater lithium from Argentina in the new lithium plant to be added in Gwangyang by 2025.

POSCO Holdings said during an earnings conference call last month that it would revise upwards its lithium production target for 2030 to more than its initial goal of 300,000 tons. 

GWANGYANG AS POSCO'S BATTERY MATERIALS CLUSTER

The reclaimed land in Gwangyang is also POSCO's manufacturing home for its other EV battery materials.

The steel and green materials group is expected to complete the construction of a high-nickel refining plant with an annual production capacity of 20,000 tons, enough to produce 500,000 electric vehicles, in the second half of this year.

It also plans to expand its annual precursor output to 50,000 tons by 2024 from the current 5,000 tons in the city. Precursors are used to improve battery capacity and life.

With the newly added production sites, the Korean steel giant, which is also the world’s sixth-largest steel maker, is expected to further speed up its green push.

POSCO in April said that it will review an investment of 4.4 trillion won in the state-run industrial complex in Gwangyang by 2033 to boost new growth sectors such as rechargeable battery components and hydrogen.

It launched POSCO Holdings in March last year to foster its core growth driver green materials business.

The 1.2 trillion won investment plan will be finalized during a board meeting next month.

Write to Jae-Fu Kim and Hyung-Kyu Kim at hu@hankyung.com

Sookyung Seo edited this article.