POSCO Chemical wins $10.6 billion cathode order from General Motors

POSCO Chemical Co. announced Thursday that it won 13.8 trillion won ($10.6 billion) worth of cathode orders from General Motors. 

The company, which specializes in global coal chemicals and carbon materials, will supply Ultium Cells cathodes from next year through 2025.

Ultrium Cells is a 50-50 joint venture between LG Energy Solution Ltd. and Detroit-based General Motors. 

POSCO Chemical's Gwangyang plant in South Jeolla Province will produce the cathodes. 

The choice of the cathode is a major determinant of battery energy density.

Cathodes are the core materials in lithium-ion batteries, used in electric vehicles. Accounting for more than 40% of the cost of EV battery production, cathodes are made up of lithium, nickel, cobalt and manganese.

Including the latest order, the maker of Buick, Cadillac and Chevrolet has placed 21.8 trillion won ($16.8 billion) worth of cathode orders with POSCO Chemical so far. 

Back in May, POSCO Chemical inked a deal to provide 8.04 trillion worth of cathode to Ultium Cells for eight years from 2025. 

To meet the rapidly growing demand, POSCO announced it will inject 326.2 billion won to expand the production line for battery precursors at its Gwangyang plant. 

The company’s board of directors approved the agenda on Wednesday.

Precursors refer to the raw materials used to make cathodes, accounting for more than 60% of the cost of cathodes.

Ground for the new production lines will be broken later this year with an aim to complete the construction within two years. 

While POSCO Chemical's current production capacity of battery precursors stands at 15,000 tons, the company plans to increase it to 220,000 tons by 2025.  

On the day the news broke, POSCO Chemical shares jumped 16.8% to 135,500 won Thursday.

The shares went through a slight correction Friday to finish the day’s trade at 131,500 won.

Write to Ik-Hwan Kim at lovepen@hankyung.com
Jee Abbey Lee edited this article.