POSCO Chemical Transforming into a Battery Material Company

Secondary Battery Material Sales Expanded to Half Level Since 2021

[Asia Economy Reporter Hwang Yoon-joo] POSCO Chemical's business restructuring efforts are gaining momentum. With the rapid growth of the electric vehicle market, the demand for secondary batteries (electric vehicle batteries) has exploded, causing POSCO Chemical's secondary battery materials (cathode and anode materials) business sales to more than double within a year. If this trend continues, POSCO Chemical is expected to generate half of its total sales from the secondary battery materials business by the end of next year.

According to industry sources on the 23rd, POSCO Chemical's secondary battery materials division is expected to record sales of 118 billion KRW in the third quarter of this year. This represents a 100% increase compared to the same period last year (59 billion KRW). If the electric vehicle market recovers rapidly this year, sales are expected to rise to 448 billion KRW by the end of the year, a 104.5% increase compared to last year (219 billion KRW).

POSCO Chemical's main businesses are broadly divided into ▲ lime chemicals (quicklime and chemicals) ▲ refractories ▲ secondary battery materials. Among these, last year's sales composition was highest in the lime chemicals division at 51%, followed by refractories at 34%, and secondary battery materials at 15%.

However, in the first quarter of this year, the lime chemicals share fell below 50% to 43%, while energy materials exceeded 20%, reaching 23%. In the second quarter, when performance significantly declined due to the impact of COVID-19, the sales share of secondary battery materials approached 30%, reaching 29%.

Within POSCO Chemical, it is expected that with the increasing trend in electric vehicle sales, the share of secondary battery materials will exceed 30% in the second half of the year and expand to 47.5% next year, transforming the business structure to focus on secondary battery materials.

The consideration of establishing overseas subsidiaries for the secondary battery materials division is also based on this background. The first overseas subsidiary is likely to be established in a region favorable to foreign investment and experiencing a rapid increase in battery shipments, among the major electric vehicle markets of Europe, China, and the United States. In particular, with LG Chem spinning off its battery business, there is speculation that the POSCO Group may transfer its secondary battery materials business to POSCO Chemical sooner than expected.

An electric vehicle battery industry official explained, "Although the cathode materials business has been unified from lithium ore procurement to lithium production plants and cathode material mass production, the business is divided between POSCO Group and POSCO Chemical," adding, "Considering the growth of the battery market and business efficiency, the plan to unify the secondary battery materials business under POSCO Chemical could be expedited."