POSCO Future M to spend $300 million on NCA cathode plant in Pohang

South Korea's battery component maker POSCO Future M, formerly POSCO Chemical, on Tuesday said it will build its first plant solely for cathode materials made of nickel, cobalt and aluminum (NCA).

The company on the day before reported to its board of directors the investment agenda for the facility and received approval.

The move comes amid rising global demand for high-nickel NCA cathode materials and seeks to raise market competitiveness by diversifying the company's base of customers and product categories in addition to its flagship lineup of materials made from nickel, cobalt and manganese (NCM) and nickel, cobalt, manganese and aluminum (NCMA).

Compared to cathode materials using NCM and NCMA, those using NCA are considered to maximize efficiency due to their high battery density and output.

Cathode accounts for 40% of battery cost as the most important material that determines the mileage, output, and charging and discharging performance of an electric vehicle (EV), with lithium as the basic component.

POSCO Future M's investment decision is based on a contract concluded in January with Samsung SDI to supply high-nickel NCA cathode materials worth 40 trillion won ($30.5 billion) for 10 years. The plant is POSCO Future M's first exclusively for such materials.

The company will invest 392 billion won (around $300 million) to build a manufacturing facility with annual capacity of 30,000 tons at the Yeongilman 4th General Industrial Complex in Pohang, North Gyeongsang Province. This output can supply 300,000 EVs in the 60 kilowatt-hour class for a year.

Construction of the Pohang plant is scheduled to start from the first half of this year and production and sales from 2025.

This year and the next, POSCO Future M will supply NCA cathode materials to Samsung SDI Co. produced at select lines of the former's cathode plant in Gwangyang, South Jeolla Province.

In April last year, POSCO Future M started building a 30,000-ton NCMA cathode materials plant at the same site in Pohang. The facility will go online next year and by 2025, the southeastern port city alone is expected to account for 60,000 tons of output.

Write to Jae-Fu Kim at hu@hankyung.com