[Great Transformation POSCO]②Battery Materials Catching Favorable Winds... Expanding Eco-Friendly Future Materials

Argentina Brine Lithium Phase 3 and 4 Plant Under Review for North America Region
Securing Independent Raw Material Supply Chain in Response to IRA
POSCO Chemical Surpasses 1 Trillion KRW in Sales Due to Strong Battery Material Demand

Editor's NoteThe global steel company POSCO Group is facing a major turning point. In line with the carbon-neutral era, it stands at an inflection point to shift its new growth engines to 'green steel' and 'eco-friendly future materials.' After several years of a brief boom, the steel market has recently reversed downward, and this trend is expected to accelerate. Despite sluggish performance, the group is actively investing, especially in the secondary battery materials sector, maintaining its momentum for innovation. Reviewing the current status of continuous investments, business expansions, and mergers and acquisitions (M&A) offers a glimpse into the blueprint of the grand transformation POSCO Group envisions.

[Asia Economy Reporters Hyungil Oh, Seoyoon Choi] POSCO Group is putting a strong drive into its company-wide eco-friendly future materials business.

The lithium business, a key material for electric vehicle batteries, is expected to reach breakeven within three years. To respond to the U.S. Inflation Reduction Act (IRA), the group is considering building the 3rd and 4th phase production plants for Argentine brine lithium in North America.

According to industry sources on the 25th, POSCO Holdings recently decided at its board meeting to invest an additional $1.09 billion (approximately 1.5 trillion KRW) in the 2nd phase of the Argentine brine lithium project. Through this 2nd phase project, they plan to produce 25,000 tons of lithium hydroxide annually in Korea starting from 2025.

Lee Kyung-seop, head of the secondary battery materials business promotion team at POSCO Holdings, explained during a conference call the previous day, "Unlike the 1st phase lithium project, where both upstream and downstream processes are conducted locally in Argentina, the 2nd phase project features upstream processing in Argentina and downstream processing at the Sepung Industrial Complex in Gwangyang, Jeollanam-do." He added, "Since Argentina does not have a free trade agreement (FTA) with the U.S., this setup is to respond to the IRA."

Starting next year, under the IRA, to qualify for electric vehicle tax credits in the U.S., a certain percentage of raw materials used in EV batteries must be sourced from the U.S. or countries with which the U.S. has FTAs.

Moreover, if the 3rd and 4th phase production plants are established in the North American region, additional benefits from the IRA are expected.

Additionally, the lithium ore plant of POSCO Philbar Lithium Solutions, which broke ground in Gwangyang last May, plans to complete two facilities sequentially between late 2023 and early 2024. The ramp-up process and certification periods are expected to be shortened to within 12 months, projecting breakeven by 2025.

[Image source=Yonhap News]

So far, POSCO Holdings has secured lithium production bases in regions that can respond to the IRA. In the nickel business, SNNC started construction of a de-ironing process to remove iron from nickel in June, and on the 14th, POSCO broke ground on a high-purity nickel refining plant, which is a raw material for cathode active materials in secondary batteries.

Also, last May, POSCO Holdings acquired a 30% stake in Australian nickel mining and smelting specialist company Ravenswood, and plans to decide on refining process investments within this year.

In particular, POSCO Chemical, which operates the battery materials business within POSCO Group, is also making continuous investments. To increase the internalization rate of precursors, an intermediate raw material for cathode active materials, it invested 326.2 billion KRW in July to expand production facilities in Gwangyang with an annual capacity of 45,000 tons. Furthermore, with the groundbreaking of the pitch plant by the joint venture P&OChemical with OCI, localization of pitch, a coating material for anode active materials, has also begun.

Moreover, together with General Motors (GM) in the U.S., POSCO Chemical established a high-nickel cathode joint venture, Ultium CAM, in Quebec, Canada, and is pushing forward with factory construction aiming for completion in the second half of 2024.

POSCO Chemical surpassed 1 trillion KRW in sales in the third quarter, driven by the strong performance of the secondary battery materials business, which accounts for more than 50% of its sales. Operating profit reached 81.8 billion KRW, the highest quarterly figure. Sales increased by 108.6% and operating profit by 159.9% compared to the same period last year. The rise in raw material prices such as lithium and nickel was reflected in selling prices, leading to significant increases in both sales and operating profit.

POSCO Lithium Investment Plan