POSCO, GS Energy to launch $121 million battery recycling joint venture

POSCO Holdings Inc., the holding company of South Korea’s largest steelmaker, and GS Energy Corp., the energy unit of GS Group, have agreed to launch a battery recycling joint venture.

The two companies on Thursday signed an initial agreement to invest a combined 170 billion won ($121 million) in the JV to be established by the end of this year. POSCO will hold 51% of the new company, POSCO GS Eco Materials. GS Energy will own the remaining 49% stake.

The two companies will initially focus on disassembling used batteries and extracting minerals such as lithium, nickel, cobalt and manganese, but later expand their partnership to run a Battery as a Service (BaaS) platform that lets customers lease and exchange batteries for their electric vehicles.

Among participants at the agreement signing ceremony on Thursday were GS Group Chairman Huh Tae-soo, GS Energy Chief Executive Huh Yong-soo and POSCO Group Chairman Choi Jeong-woo.

“Starting with Europe, secondary battery recycling will become mandatory from 2030 in many countries,” said POSCO chief Choi.

POSCO plans to invest 25 trillion won in its rechargeable battery business by 2030 to create 4.3 trillion won in earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2026 and 11.4 trillion won in 2030.

The company is also said to be considering establishing a holding company focused on the lithium and nickel business as a wholly owned subsidiary of POSCO Holdings.

URBAN MINING

In August, POSCO said it has completed the construction of an EV battery recycling plant in Poland.

With electric vehicles increasingly becoming the mainstream, the world’s major carmakers and battery companies are waging another type of turf war: battery recycling and reuse.

The market for “urban mining” is growing rapidly as field mining could be an environmental disaster.

Analysts said mining key battery raw materials from used battery packs will be a growing business, as mining the materials from the field is detrimental to the environment because the process creates huge amounts of carbon emissions.

Battery recycling and reuse are also emerging as booming industries amid global initiatives by both governments and the private sector to prevent tens of thousands of tons of lithium-ion batteries from entering landfills, creating environmental problems.

The average life of an EV battery is about 15 years, industry officials said.

The EV battery recycling market is forecast to grow to 87 trillion by 2040 from 400 billion won in 2020, according to market tracker SNE Research.

Write to Ik-Hwan Kim at lovepen@hankyung.com
In-Soo Nam edited this article.