"Core of Ecopro's Competitiveness"… Inside the 'Closed Loop System' [Battery Mastery] (25)

Report on Pohang Yeongilman Industrial Complex Ecopro Campus
Integration of Used Battery, Lithium Processing, Precursor, and Oxygen Production
Enhancing Cost Competitiveness and Efficiency... Establishment of Smart Factory
Applied Similarly to 4th Campus and Blue Valley Industrial Complex

Pohang City Designated as Secondary Battery Specialized Complex
Targeting 70 Trillion KRW in Secondary Battery Sales by 2030
"Transforming from Steel City to Secondary Battery City"

Editor's NoteWe are now in the battery era. Batteries are found in almost every device, including mobile phones, laptops, and electric vehicles. [Complete Battery Conquest] is a section created to easily convey the basics of batteries, their ecosystem, company information, industry trends, and outlook to general readers, students, and investors interested in the battery industry and related companies. We visit you every Saturday.

On the 21st, we visited the construction site of EcoPro's 4th Campus in the Yeongilman General Industrial Complex in Pohang, Gyeongbuk. Construction began last year, and excavation and steel frame work were in full swing. The 4th Campus, covering about 50,000 pyeong, will house four EcoPro Group subsidiaries related to secondary batteries: EcoPro BM, EcoPro Materials, EcoPro CNG, and EcoPro AP.

Upon entering the construction site, the steel frame work of the EcoPro Materials plant was already significantly underway. The 4th Campus will apply EcoPro’s proud 'Closed Loop Eco System' as it is.

EcoPro 4 Campus construction site being developed within the Yeongilman Industrial Complex in Pohang. 2024.2.21. Photo by Kang Hee-jong

The Closed Loop System refers to a production system that integrates all processes in one place?including recycling of used batteries, precursor and lithium hydroxide processing, oxygen and nitrogen production, and cathode material manufacturing?to secure cost competitiveness and improve production efficiency.

EcoPro has already successfully established the Closed Loop System at the Yeongilman Industrial Complex’s 1st, 2nd, and 3rd Campuses. This experience will be applied not only to the 4th Campus but also to overseas production facilities in Pohang Blue Valley Industrial Complex, Hungary, Canada, and others. The Yeongilman EcoPro Campus serves as a kind of mother line.

Raw materials extracted from used batteries are reused in cathode material production

The Closed Loop System begins with EcoPro CNG, a subsidiary that recycles used batteries. EcoPro CNG dissolves lithium extracted from waste batteries in a solvent and transfers it via pipelines to the adjacent building, EcoPro Innovation, where it is processed into lithium hydroxide, a cathode material raw material.

Raw materials such as nickel, cobalt, and manganese, which are difficult to liquefy, are transported in powder form by logistics vehicles to EcoPro Materials, the precursor production subsidiary.

EcoPro currently procures about 5% of cathode material raw materials through recycling. This proportion is expected to increase as the number of used batteries from electric vehicles grows.

EcoPro AP, a subsidiary, produces the oxygen and nitrogen needed for the cathode material calcination process. Within the 3rd Campus, two large towers about 40 meters high, called 'cold boxes,' stand tall.

These towers draw in air and extract oxygen, nitrogen, and argon gases. Oxygen and nitrogen required for cathode material production are sent through underground pipelines to each subsidiary. At the production sites, simply opening a valve allows immediate use of oxygen and nitrogen. Argon gas is sold to semiconductor manufacturing companies.

EcoPro Materials operates two production processes: the CPM process producing precursor finished products and the RMP process processing key raw materials such as nickel, cobalt, and manganese. These two production facilities are connected by large pipes, significantly reducing logistics and production costs.

The final cathode material manufacturers, EcoPro BM and EcoPro EM, receive precursors from EcoPro Materials and lithium hydroxide from EcoPro Innovation to produce products, completing the Closed Loop System.

Panoramic view of Ecopro Pohang Campus. Photo by Ecopro

Supporting EcoPro’s Closed Loop System are logistics automation and smart factories. Entering the logistics warehouse located at the center of the 3rd Campus, raw materials, semi-finished products, and finished products were neatly stacked in color-coded tone bags on racks several tens of meters high.

On conveyor belts connected to production facilities, AGVs (Automatic Guided Vehicles) continuously moved, transporting the tone bags. These tone bags are then moved to racks or AGVs by robotic cranes. Employees only need to monitor the process via screens to ensure proper operation. By introducing this system, EcoPro reduced the workforce needed for logistics and greatly improved production efficiency.

Closed Loop System also applied overseas

EcoPro, headquartered in Ochang, Chungbuk, began establishing production facilities in Pohang in 2016. Former Chairman Lee Dong-chae was confident in the growth potential of the future secondary battery market and decided to make a large-scale investment in the Yeongilman Industrial Complex in Pohang.

At the time, there were many internal objections to such a large investment. However, Chairman Lee emphasized in discussions with executives, "Producing only cathode materials in the future will inevitably limit value creation," and "If the cost of battery materials is 100, we must control at least 60 to 70." To executives concerned about funding, he persuaded them by saying, "If the business succeeds, the money will follow."

After proposing this idea to Pohang City, Chairman Lee officially launched the Yeongilman project. By 2023, EcoPro had invested 2.9 trillion won to build a value chain covering all material sectors from raw materials, precursors, cathode materials, to recycling. When the 4th Campus is completed in 2025, the EcoPro Campus in the Yeongilman Industrial Complex will expand to 150,000 pyeong.

EcoPro’s 'Closed Loop Eco System' established in Pohang is being benchmarked not only by domestic competitors but also by battery cell companies and overseas electric vehicle OEMs.

EcoPro plans to apply the Closed Loop System as is to the upcoming Pohang Blue Valley Industrial Complex.

EcoPro plans to invest more than 2 trillion won by 2028 to build a 210,000-pyeong secondary battery production facility within the Blue Valley Industrial Complex. Each subsidiary will secure more than 30,000 pyeong of land. This will create a mega-sized cathode material cluster encompassing raw materials, precursors, cathode materials, and recycling.

"Producing 710,000 tons of cathode materials by 2027"

Founded in 1998, EcoPro started with developing products that adsorb harmful gases emitted from factories. Later, it expanded its business by developing electrolytes and precursors for secondary batteries in collaboration with Cheil Industries. EcoPro officially entered the secondary battery business in 2006 by acquiring the cathode material business from Cheil Industries.

Initially, EcoPro focused on the precursor business, but shifted to cathode materials as China entered the market with low-priced products. EcoPro gained recognition by supplying cathode materials to Sony for the first time in 2013. Currently, it supplies high-nickel cathode materials to global battery cell companies such as Samsung SDI and SK On. According to SNE Research, EcoPro held a 6.6% share of the global high-nickel cathode material market in 2022, ranking first worldwide.

EcoPro’s original air environment business was spun off and is now operated by EcoPro HN. In the secondary battery sector, six subsidiaries operate: EcoPro BM (cathode materials), EcoPro EM (cathode materials for Samsung SDI), EcoPro Materials (precursors), EcoPro Innovation (lithium hydroxide processing), EcoPro CNG (recycling), and EcoPro AP (oxygen and nitrogen production), starting with the establishment of EcoPro BM in 2016 through a physical division.

Starting with the completion of the first cathode material plant in Ochang in March 2008, EcoPro currently operates five cathode material plants in Ochang alone, producing 30,000 tons of cathode materials annually. Combined with 150,000 tons in Pohang, EcoPro’s annual cathode material production capacity reached 180,000 tons as of 2023.

Including the Blue Valley Campus, EcoPro plans to expand cathode material production capacity to 710,000 tons by 2027. This capacity is enough to equip about 7.7 million electric vehicles.

EcoPro’s sales have also surged rapidly. Consolidated sales of EcoPro and its subsidiaries grew from 329 billion won in 2017 to 7.25 trillion won in 2023.

EcoPro is currently focusing on the precursor sector. Although it adjusted its business due to China’s low-price competition, it is now strengthening this area again. The U.S. Inflation Reduction Act (IRA) has highlighted the importance of domesticating critical minerals in the battery industry.

EcoPro currently self-supplies 20-30% of precursors through EcoPro Materials. When an additional precursor plant is built at the 4th Campus, this ratio is expected to increase. EcoPro Materials produces 50,000 tons of precursors annually at the 3rd Campus. Upon completion of the 4th Campus, production capacity will increase to 110,000 tons. The company plans to expand capacity to 210,000 tons by 2027.

EcoPro Materials is establishing a precursor plant in the Saemangeum National Industrial Complex together with SK On and China’s GEM (Gelinmei). This plant, scheduled for completion in 2025, will produce 50,000 tons of precursors annually.

Pohang: "Secondary battery sales to reach 70 trillion won by 2030, surpassing steel"

Pohang City Hall, located in Nam-gu, Pohang, Gyeongbuk, has a unique department rarely seen in other local governments: the Battery Advanced Industry Division. This shows how much Pohang is interested in fostering the secondary battery industry. A large banner in the Battery Advanced Industry Division office reads, "Pohang City, Beyond Steel for National Prosperity, Towards Battery for National Prosperity."

In July last year, Pohang was designated by the government as a specialized secondary battery complex. The city is home to secondary battery material companies such as EcoPro and POSCO Future M. The investment amount committed by the two leading companies, EcoPro and POSCO Future M, in Pohang reaches 7 trillion won by 2027. Including other companies, the total committed investment amount is about 14 trillion won.

Based on this, Pohang plans to nurture secondary batteries as the next-generation growth engine following steel. The city aims to produce 1 million tons of cathode materials and achieve sales of 70 trillion won by 2030. This is about twice POSCO’s sales (35.1523 trillion won in 2022). In just over 50 years since the first molten iron was produced at Pohang Steelworks in 1973, Pohang is transforming from a steel city to a secondary battery city. The number of workers in the secondary battery industry is expected to increase from 2,000 currently to over 10,000 by 2030.

Pohang is developing the Yeongilman General Industrial Complex and Blue Valley National Industrial Complex as secondary battery special zones. Combined, the two complexes cover about 2.97 million pyeong.

The Yeongilman Industrial Complex houses EcoPro (cathode materials), POSCO Future M (cathode materials), and Energy Materials (a GS Construction subsidiary, recycling). Chinese precursor company CNGR and POSCO Silicon Solution (anode materials) are also scheduled to move in. All land in the Yeongilman Industrial Complex has been sold out, and development is expected to be completed by 2025.

The Blue Valley Industrial Complex is planned to be developed in two phases. All land in Phase 1 has been sold, and about 70% of Phase 2 land has been contracted.

The Blue Valley Industrial Complex is or will be home to POSCO Future M (anode materials), Mirae Ceratec, PM Grow, New Tech LBI, and EcoPro. A joint factory of POSCO Future M and China’s Huayou Cobalt, as well as Chinese battery recycling company Jinsen Saesin Energy, will also be located here.

The Secondary Battery Comprehensive Management Center, established by Gyeongsangbuk-do to support the secondary battery industry in the province, is also located in the Blue Valley Industrial Complex. Completed in October 2021, the center also serves as a hub collection center for used batteries. Lee Young-joo, director of the Secondary Battery Comprehensive Management Center, explained, "We rent offices at low prices to small and medium battery-related companies to encourage new product development, and also provide open experimental spaces for demonstration."

One of the challenges faced by companies in the Pohang secondary battery industrial complex is securing high-level talent and housing stability. Regarding this, Seo Hyun-jun, head of the Battery Advanced Industry Division, said, "We operate the Battery Academy Southern Region manpower training project to supply personnel to secondary battery-related companies in Pohang," and "We have formed a task force for the secondary battery specialized complex to address difficulties." Once the convention center under construction is completed, secondary battery-related exhibitions will also be held.