POSCO Holdings to invest extra $1.1 billion in Argentine lithium plant

POSCO Group, which owns South Korea’s largest steelmaker, plans to invest an additional $1.09 billion, or 5 trillion won, in its lithium production facility in Argentina amid a growing trend of resource nationalism worldwide.

POSCO Holdings Inc., the investment holding company of the steel giant, said on Tuesday its board of directors approved the investment plan last Friday to push ahead with its second-phase lithium hydroxide production facility expansion project in the Latin American country.

POSCO Holdings said it will secure the necessary funds from its corporation in Argentina and a new company to be launched in Korea to produce lithium carbonate.

POSCO has already injected $830 million in its first-phase lithium production facility in Argentina, and when combined with its latest spending, the total investment in its Argentine lithium project will reach $1.92 billion, it said.

The second-phase investment to be made by the end of this year will mostly go to building a lithium hydroxide plant near the salt flat of Salar del Hombre Muerto in northwest Argentina.

A Korean plant that processes lithium hydroxide to produce lithium carbonate will break ground in the first half of next year with an aim to complete construction work by the end of 2025.

With its additional investment in Argentina, POSCO aims to have a capacity to produce 25,000 tons of lithium hydroxide annually, enough to make rechargeable batteries for 600,000 electric vehicles.

Lithium is a core mineral used to make cathode, a battery component that accounts for up to 40% of battery manufacturing costs.

POSCO Holdings said lithium produced at its plants will be supplied to POSCO Chemical Co. and other Korean cathode material makers.

ADVANCE ITS SECOND-PHASE INVESTMENT

“We’re advancing our second-phase investment originally planned for next year to meet growing demand for lithium from our clients after the US government’s EV tax credit law took effect,” said a POSCO Holdings official.

In 2018, POSCO acquired lithium reserves at a salt lake in Argentina for $280 million. A 2020 assessment estimated the size of lithium reserves at the lake at 13.5 million tons, more than six times POSCO’s initial estimate of 2.2 million tons.

A POSCO Holdings executive said in May the company will invest 25 trillion won ($20 billion) in rechargeable battery projects, including purchasing stakes in battery material companies, mineral mines and related facilities, by 2030.

The huge spending plan is designed to help POSCO build its own battery metal supply chain and reduce Korea’s reliance on Chinese companies.

With the $20 billion investment, POSCO aims to establish facilities to produce 605,000 tons of cathode, 322,000 tons of anode and 300,000 tons of lithium a year by 2030.

Korea is home to leading battery makers, including LG Energy Solution Ltd., SK On Co. and Samsung SDI Co., which heavily rely on Chinese companies for battery raw materials.

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