POSCO to invest $4 bn in Argentina battery materials project

South Korea’s POSCO Group is set to spend $4 billion for the capacity expansion of a new lithium hydroxide factory in Argentina and cathode materials production to target the electric vehicle battery market in the Americas.

The world’s sixth-largest steelmaker on Monday signed a memorandum of understanding with the Argentine government to expand the capacity of the lithium hydroxide plant and cooperate on cathode production.

Under the agreement, POSCO will raise the capacity of the planned lithium hydroxide factory with an annual capacity of 25,000 tons to 100,000 tons. Lithium hydroxide is a high-demand lithium product for battery makers. The group will consider producing cathode materials based on the product processed there. Argentina’s presidential office said the group will invest $4 billion in total.

“We will set up a value chain that leads from lithium raw materials to cathode materials,” said a group source, adding it plans to make a final decision on the investment within this year.

FUTURE GROWTH ENGINE

POSCO Group Chairman and Chief Executive Choi Jeong-woo discussed cooperation between the group and Argentina on secondary battery materials with the country’s top government officials including President Alberto Fernández and Minister of Productive Development, Matías Kulfas at the Casa Rosada, the presidential palace in Buenos Aires.

“Lithium, a core material for EV batteries, is a key business sector that will lead POSCO Group’s future growth,” Choi said, asking for Argentina’s government support during the meeting.

Choi visited Argentina for a groundbreaking ceremony scheduled on Wednesday of the lithium hydroxide factory in the South American country. The group has earmarked $830 million for spending on the plant.

POSCO aims to start operations of the plant in the first half of 2024. Its initial production of 25,000 tons a year is enough for batteries for 600,000 EVs.

The group secured 13.5 million tons of raw lithium, purchasing in 2018 the Hombre Muerto Salt Lake in northwest Argentina. The group has been establishing infrastructure for a plant that processes the material into lithium hydroxide for three years since the takeover.

Write to Jung-hwan Hwang at jung@hankyung.com
Jongwoo Cheon edited this article.