[Click e-Stock] "POSCO Future M, Investment to Meet Stricter Mineral Qualification Requirements"

On May 14, Hana Securities lowered its target price for POSCO Future M from 147,000 won to 124,000 won to reflect share dilution resulting from a rights offering. However, the firm assessed that the company still maintains clear visibility for continued earnings growth. The investment opinion was maintained at 'Neutral.'

Previously, after the market closed the previous day, POSCO Future M announced a rights offering worth approximately 1.1 trillion won. A total of 11.48 million new shares will be issued, with the offering price set at 95,800 won per share. This capital raise is intended to respond to the restructuring of material supply chains in Europe and the United States. The funds will be used for operating a precursor plant to meet mineral qualification requirements for cathode materials (288.4 billion won), investment in cathode material facilities in Canada (353.4 billion won), and investment in domestic graphite facilities (277.3 billion won).

The background to this rights offering is seen as a shift in POSCO Future M's management policy, moving away from aggressive preemptive investment plans to a strategy of responding flexibly to market demand as it arises. Kim Hyunsoo, a researcher at Hana Securities, stated, "With this expansion, the company will secure 305,000 tons of cathode material capacity, which is expected to meet market demand through the late 2020s." He added, "Given total North American and European cathode material demand of 1.33 million tons and potential demand penetration in Korea of 730,000 tons by 2030 (according to Hana Securities' battery supply-demand model), this is an appropriate level."

Kim further noted, "U.S. OEMs are imposing strict mineral qualification requirements on battery and cathode material companies due to electric vehicle subsidies and AMPC (Advanced Manufacturing Production Credit), while European OEMs are doing so because of the CRMA (Critical Raw Materials Act), which requires that dependency on any single country for key mineral materials be kept below 65% by 2030." He concluded, "Through this rights offering, the company has secured funds to smoothly operate its Korean precursor plant, which is the most critical factor in the mineral qualification review for cathode materials, and to expand anode (graphite) capacity in anticipation of U.S. tariffs on Chinese imports starting in 2027. This lays the groundwork for a rapid increase in utilization rates for both cathode and anode idle capacity going forward."