POSCO Int’l to invest $519 mn in EV parts output expansion

POSCO International Corp., the energy and trading unit of South Korea’s steel giant POSCO Holdings Inc., plans to spend 680 billion won ($519.1 million) on raising electric vehicle component production to take advantage of growth in the clean car sector as a part of the company’s goal to expand eco-friendly businesses.

POSCO International said on Thursday it is set to invest the money from 2024 to 2035 to more than double the global output of traction motor cores for eco-friendly mobility to 10 million units from planned 4.3 million in 2025. The company aims to allocate 44% of the fund to North America, the world’s second-largest EV market, and 20% to the third-biggest Europe, respectively.

“Vehicle electrification prompted the auto parts industry to shift its focus to batteries and traction motors from components for engines and transmissions,” POSCO International said in a material released for an investor relations meeting on Wednesday.

The world’s traction motor sector is predicted to expand faster than the EV market with demand for the component forecast to reach 140 million units in 2035, far more than 90 million EVs, as more powerful larger EVs need multiple motors, POSCO International said. The GMC HUMMER EV Electric sport utility vehicle with 830 horsepower (hp) needs as many as three motors, for example, and the Rivian R1S SUV with 835 hp needs four.

POSCO International has recently signed a 1 trillion won deal to supply a US automaker with EV traction gears from 2024 through 2032.

After the news, its share prices soared as much as 9.7% to 62,400 won in the South Korean stock market, far outperforming a 0.7% gain in the benchmark Kospi.

MEXICO, POLAND

To meet such demand, POSCO International aims to raise motor core output in Mexico to 4 million units by 2035 from the planned 1.4 million in 2025. The company completed the construction of a factory in Ramos Arizpe, Coahuila, last month and plans to build another one in the country.

POSCO International is poised to jack up the production of the parts in Poland to 1.8 million units from the scheduled mere 20,000 units during the period. It will break ground for a plant in the Central European country during the first half of 2024.

In China, the world’s top EV market, the company aims to nearly double the output to 1 million units in 2030 and maintain the capacity in the following five years from 570,000 units in 2025 while increasing the production in India, Asia’s third-largest economy, to 500,000 units by 2035 from 70,000 in 2025.

POSCO International’s motor core production in South Korea will be raised to 2.7 million units from 2.3 million during the decade.

The company also plans to expand its business into the fuel-cell electric vehicle sector.

“The expansion of the mobility business’ value chain will be an important factor in upgrading the company’s corporate value,” said Baek Jae-seung, an analyst at Samsung Securities Co., at the event.

TO RAISE BATTERY MATERIALS SUPPLY BY 10 TIMES

POSCO International plans to ramp up its supply of eco-friendly secondary battery materials by more than 10 times to 345,000 tons by 2030 from an estimated 34,000 tons this year.

The company is set to produce 100,000 tons of graphite in the next seven years from none while raising the output of materials for copper foil to 100,000 tons from 12,000 tons during the period. It is poised to increase production of nickel and lithium to 35,000 tons and 70,000 tons, respectively, from 11,000 tons and 5,000 tons.

POSCO International also aims to triple sales of eco-friendly steel products to the renewable energy sector to 2.2 million tons by 2030 from an estimated 690,000 tons this year, taking advantage of the growth in the clean energy industry.

“Sales and operating profit of eco-friendly businesses are expected to double and quadruple in 2030, respectively, from this year,” said POSCO International Chief Officer of Global Business Unit Lee Kye-In without elaborating.

Write to Hyung-Kyu Kim at khk@hankyung.com
 

Jongwoo Cheon edited this article.