POSCO Int’l wins $9 bn permanent magnet orders from US, Europe

POSCO International Corp. has bagged deals worth nearly 1.2 trillion won ($9 billion) in total to deliver permanent magnets to finished carmakers in North America and Europe, using rare earth minerals sourced outside of China to speed up the creation of the ex-China global permanent magnet supply chain.

The general trading unit of South Korea’s No. 1 steel group POSCO Holdings Inc. announced on Tuesday that its US operation has landed a deal worth about 900 billion won to supply permanent magnets to an unnamed finished automaker in North America from 2026 to 2031.

The magnets will be used in drive motors for the carmaker’s upcoming mid and large-size electric vehicles.

POSCO International’s German operation also won a separate order worth about 260 billion won to ship permanent magnets to an undisclosed European premium auto brand from 2025 to 2034.

The Korean company will use rare earth minerals from the US, Australia and Vietnam to produce permanent magnets for the latest deals in a bid to reduce the global permanent magnet market’s reliance on the exotic minerals from China, which account for the lion’s share of 90% in international rare earth supplies.

The fresh deals are expected to foster the growth of POSCO International’s green mobility driving system business, one of the new growth engines promoted by POSCO Group.

Following the deals, POSCO's trading and energy exploration unit also plans to expedite the expansion of the global permanent magnet supply chain excluding China, the company said.

IN PARTNERSHIP WITH STAR GROUP

Star Group Industrial Co., Korea’s sole producer of rare earth permanent magnets, will produce permanent magnets for the latest deals, while POSCO International with its massive global network will be in charge of their sale and distribution.

Star Group and POSCO International in October last year agreed to jointly build a permanent magnet-producing factory in the US.

The permanent magnet is an essential part of a drive motor, which acts as the heart of an electric vehicle.  

An electric vehicle needs a drive motor to run and motor cores to convert electric power into kinetic energy for motion.

Without permanent magnets, motor cores cannot function properly, and their quality affects an EV's efficiency.

As rare earth permanent magnets boast stronger magnetism than general permanent magnets, more than 80% of EV driving motors use rare earth permanent magnets.

However, the global rare earth permanent magnet market has been monopolized by Chinese players.

Against China’s dominance, POSCO International has teamed up with Star Group.

It is yet to be confirmed whether the two companies will produce permanent magnets from their US factory for the latest deals.

Star Group founded in 1994 operates a factory in North Gyeongsang Province to produce permanent magnets for autos, information technology devices and industrial motors.

It has been a permanent magnet supplier of Hyundai Motor Group for a decade, while it has been working with POSCO International for the global distribution of its magnets.

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


Sookyung Seo edited this article.