POSCO Chemical to expand EV battery materials capacity in China

South Korea’s POSCO Chemical is set to bolster production capacity of electric vehicle battery materials in China, the world’s top battery market, in a move to accelerate its overseas expansion.

The secondary battery materials maker said on Aug. 25 its board of directors agreed to invest 281 billion won ($240.7 million) in the expansion of plants run by two joint ventures between POSCO Group and Zhejiang Huayou Cobalt, the world’s largest cobalt producer.

POSCO and Huayou in March 2018 established a cathode production JV and a precursor production JV with an annual capacity of 5,000 tons each in Tongxiang in China's eastern province of Zhejiang.

POSCO Chemical plans to increase their capacity to 35,000 tons a year each by adding new plants for cathodes and precursors. The company is scheduled to break ground in the second half with an aim to start producing high nickel cathodes for EVs from 2023. The 35,000 tons of cathodes are enough to power 390,000 EVs with 60kWh battery packs. The cathodes will be supplied to battery makers in China including units of South Korean producers there.

Cathodes are key materials used in making secondary batteries, taking up to around 40% of their manufacturing costs. The precursor is a material created by mixing nickel, cobalt and manganese, and is added to lithium to make cathodes.

Chinese major battery makers dominated the global market with a 43% market share in the first half, according to market tracker SNE Research. POSCO Chemical generated 48% of its total sales of secondary battery materials from China last year.

In addition, POSCO Chemical is seeking to set up cathode subsidiaries in the United States and Europe to meet surging demand for EVs. Through those units, it will supply 160,000 tons of the material in South Korea and 110,000 tons in overseas markets by 2025.

“We plan to speed up investment in a preemptive manner to deal with the quickly growing markets,” said POSCO Chemical CEO Min Kyungzoon.

Write to Kyung-Min Kang at kkm1026@hankyung.com
Jongwoo Cheon edited this article.