POSCO Group Injects 900 Billion Won into Secondary Battery Subsidiaries... Full-Scale Response to "Chasm Crisis"

POSCO Holdings to Participate in Capital Increase for POSCO Future M and Others
Invests 525.6 Billion Won in Key Subsidiary POSCO Future M
Funds to Be Used for Cathode Plant Expansion, Lithium, and Recycling Investments
Chairman Chang Inhwa: "North America Must Serve as a Bridgehead for Market Recovery"

POSCO Group is investing over 900 billion won in its secondary battery materials subsidiaries, which have been struggling due to the "chasm" (a temporary stagnation in demand) in the electric vehicle market. The company explained that this move is aimed at strengthening the competitiveness of its secondary battery business and ensuring responsible management of its core businesses.

On May 13, POSCO Holdings announced that its board of directors had decided to invest a total of 922.6 billion won in paid-in capital increases for three secondary battery materials companies: POSCO Future M, POSCO Pilbara Lithium Solution, and POSCO GS Eco Materials. The largest portion will go to its main subsidiary, POSCO Future M. On the same day, the board approved a shareholder-allotted paid-in capital increase worth 1.1 trillion won. POSCO Holdings plans to acquire all new shares corresponding to its 59.7% ownership stake, amounting to 525.6 billion won.

POSCO Building, Yeoksam-dong, Gangnam-gu, Seoul. Photo by Huh Younghan younghan@

POSCO Future M plans to use the funds raised from this capital increase to expand its production capacity for both cathode and anode materials, including investments in a joint cathode plant in Canada and the expansion of its Pohang and Gwangyang plants. Specifically, the purposes disclosed include 181 billion won for facility investments, approximately 288.4 billion won for operating funds, and 630.7 billion won for acquiring securities of other companies.

POSCO Future M has been increasing its investments in the secondary battery materials business. However, the need for a paid-in capital increase has arisen due to the electric vehicle chasm, as well as growing uncertainty in the battery market and plummeting profitability caused by factors such as the tariff war initiated by U.S. President Donald Trump. Previously, during the first-quarter earnings conference call held on April 24, POSCO Holdings stated, "We are broadly reviewing POSCO Future M's financial structure and funding situation, and plan to determine the timing and methods of fundraising, including appropriate capital increases and additional borrowing."

Last year, instead of a paid-in capital increase, POSCO Future M issued hybrid securities worth 600 billion won to maintain financial soundness. Hybrid securities are classified as equity on the balance sheet, which helps lower the debt ratio. However, POSCO explained, "After COVID-19, investment costs have increased significantly more than initially expected due to rising prices. Even after production begins, there is a time lag before sales are recognized, and with the worsening market conditions, short-term financial support is indeed necessary."

To establish a stable operational foundation for its lithium production and recycling divisions, POSCO Holdings will also inject funds into POSCO Pilbara Lithium Solution (328 billion won) and POSCO GS Eco Materials (69 billion won). POSCO Pilbara Lithium Solution is a joint venture established in 2021 by POSCO Holdings and Australian mining company Pilbara Minerals, with 82% and 18% ownership stakes, respectively. The company imports lithium ore from Australia and produces lithium hydroxide at its Gwangyang plant in Korea. POSCO GS Eco Materials is the holding company of POSCO HY Clean Metal, which specializes in secondary battery recycling, and is jointly invested by POSCO Holdings and GS Energy.

POSCO Holdings expects that this investment will improve the financial structures of its subsidiaries and help establish a stable foundation for business operations. A POSCO Holdings representative explained, "By completing investment projects and improving our financial structure in preparation for a full-scale market recovery after the chasm, we aim to secure future competitiveness and strengthen responsible management of the group's core businesses."

Meanwhile, on April 29 (local time), POSCO Group Chairman Chang Inhwa visited the construction site of Ultium CAM, a joint venture between POSCO Future M and GM in Quebec, Canada, to directly inspect the status of the global secondary battery materials business. Chairman Chang emphasized, "We must establish a foothold for entering the North American market in line with the timing of market recovery," and urged, "We need to enhance efficiency through AI-based productivity innovation and localization strategies."