POSCO-GM JV to double cathode output, build precursor plant

South Korean battery materials producer POSCO Future M Co. said on Friday it will inject 1 trillion won ($765 million) into its joint venture with General Motors Co. to double cathode production capacity and build its first precursor plant of the venture in North America by 2026.

With the new funding, the 85:15 JV, Ultium CAM, will build a second cathode materials plant and its first precursor factory. Founded in July 2022, it is the world’s first JV between GM and a battery materials supplier.

They will likely be constructed in Becancour, Quebec, where Ultium CAM is building a $633 million plant to produce up to 30,000 tons of cathode materials per year. It is scheduled to be completed by 2024.

Its annual production volume there will be enough to supply lithium nickel-cobalt-aluminum oxide (NCA) cathode materials to about 300,000 electric vehicles using 60-kilowatt hour (kWh) batteries.

The capacity expansion plan was unveiled shortly after their JV secured its second massive supply deal from Ultium Cells, a battery manufacturing JV between GM and LG Energy Solution Ltd.

Under the binding agreement, Ultium CAM will supply 13.2 trillion won ($10 billion) worth of high-nickel cathode materials to Ultium Cells over nine years, starting in 2025.

Last year, Ultium CAM clinched a 13.8 trillion won cathode supply order from the GM-LG Energy venture.

Once the second cathode plant is completed, Ultium CAM will be able to more than double its cathode production capacity to 63,000 tons per year. Its precursor factory will have an annual capacity of 45,000 tons.

A cathode is a material that determines battery capacity and average voltage. It accounts for 40% of a battery's manufacturing cost. 

A precursor is an intermediate material for a cathode and processes minerals such as nickel, cobalt and manganese.

POSCO Future M's new investment comes after the Canadian federal government and Quebec province last month announced the provision of C$300 million ($220 million) in incentives for Ultium CAM's facilities in the country.
 

The capacity expansion in Canada is part of preemptive efforts to meet growing demand for EVs in North America while complying with the US battery component requirement, POSCO said.

Under the US Inflation Reduction Act, signed into law last August, EV batteries must source a certain percentage of their materials in North America, or via its free trading partners to be eligible for government subsidies.

Cathodes produced by Ultium CAM's facilities under construction in Canada will be embedded in the battery cells that power GM’s EV models of Chevrolet, Cadillac, GMC, Buick and BrightDrop.

Detroit-based GM will boost EV manufacturing capacity to produce up to 1 million units annually in North America by 2025. To do so, it will set up four battery cell JVs in the US to produce 160 gigawatt hours of battery cells.

For its part, the POSCO Group unit is building cathode production lines not only in North America but also in China, Europe and Korea.

Apart from Ultium CAM's two cathode supply orders from Ultium Cells, POSCO Future M has won a string of large-scale cathode deals.

Earlier this year, it sealed a 30.3 trillion won contract with LG Energy Solution and a 40 trillion won deal with Samsung SDI Co.

POSCO Future M's cathode production capacity is expected to increase nearly sixfold to 610,000 tons per year by 2030, compared with the current 105,000 tons.

This April, it broke ground on its first high-nickel NCA production facility in Korea to mass produce up to 30,000 tons of cathode materials annually.

Write to Jae-Fu Kim and Hyung-Kyu Kim at hu@hankyung.com
Yeonhee Kim edited this article