[Report] Battery Production Chain 'De-China'... Inside POSCO Future M's Gwangyang Precursor and Cathode Material Plants

Core Battery Material "Precursor":
Over 90% Dependent on China Until Now
Self-Sufficiency Enables Easier Exports to the U.S.... Customer Demand on the Rise

On June 10, at the POSCO Future M precursor plant in Gwangyang, South Jeolla Province, massive cylindrical reactors with a silvery sheen were operating with mechanical sounds. Dissolved nickel, cobalt, and manganese are fed into these reactors to produce precursor, a process considered critical because it determines the capacity and electrochemical properties of battery cells. Precursor, which accounts for 70% of battery production costs, is produced at POSCO Future M's Gwangyang plant at an annual scale of 45,000 tons. This is enough for batteries for 500,000 electric vehicles.

Nosujin, Plant Manager of POSCO Future M Gwangyang Precursor Factory, is introducing the production equipment. Photo by POSCO Future M

Inside the precursor plant, ten production lines were running, but hardly any workers could be seen. In one office area, dozens of monitors were monitoring the entire facility in real time. Most systems, such as leak detectors and temperature sensors, are automated, allowing fewer than ten employees to efficiently control each process.

First, raw materials made by dissolving nickel, cobalt, and manganese are fed into the reactor. Just as sugar dissolves in water, the raw materials are melted and then ionized according to POSCO Future M's proprietary recipe to produce precursor. After dehydration and drying, the precursor is transferred to the cathode material plant, where it is synthesized with lithium and becomes cathode active material through processes such as calcination, washing, and coating. Nosujin, the precursor plant manager, explained, "The Gwangyang plant produces nickel-cobalt-manganese (NCM) precursor through six major stages. Raw materials are dissolved in ultrapure water, which has electrical resistance close to zero, to make a solution, and then fed into the reactor to synthesize the precursor."

Moving next door to the cathode material plant, nine calcination furnaces, each 55 meters long, came into view. The heat generated during the calcination process created a wave of hot air about 36 degrees Celsius. The facility, which has seven floors, is equipped with automated systems that integrate everything from raw material input to mixing, calcination, and packaging in a single process.

Ko Jaemin, head of the anode material plant at POSCO Future M in Gwangyang, explaining the manufacturing process. Photo by POSCO Future M

The main product manufactured at this plant is NCM-series cathode material. NCMA high-nickel single-crystal cathode material is also mass-produced here for the first time in Korea and supplied to customers. Ko Jaemin, head of the cathode material plant, said, "Cathode active material is produced through first and second calcination, and the quality of the cathode material is determined during this process. The calcination furnace process is the most important because high-quality products can only be produced if utility lines such as temperature, oxygen, and humidity are properly managed."

"If even one non-magnetic foreign particle enters, it results in 4.5 tons of defective product and a loss of at least 100 million won." This large notice at the plant entrance illustrates how strictly POSCO Future M manages the prevention of foreign substance contamination to ensure high-quality cathode material. The plant interior is maintained at positive pressure to block external contaminants, and dehumidified air is supplied according to seasonal humidity. The packaging room is separately sealed and operated with constant temperature and humidity. Even the press had to undergo an air shower before entering the plant. Ko emphasized, "If even a single particle just a few micrometers in size is found, the entire batch is deemed unfit, so we thoroughly control for foreign substance contamination."

The reason POSCO Future M has established its own supply chain connecting precursor and cathode material is to accelerate its "de-China" strategy amid the global supply chain reorganization. According to SNE Research, more than 90% of domestic cathode material companies currently import from China. However, under the U.S. Inflation Reduction Act (IRA), using Chinese precursor means companies cannot receive tax credits, and by 2032, demand for cathode material precursor is expected to more than double compared to last year. For battery manufacturers, building a non-Chinese supply chain has effectively become a survival strategy.

POSCO Future M sources high-purity nickel sulfate refined by POSCO Group and also procures nickel sulfate from recycled batteries through POSCO HY Clean Metal. Lithium is also stably secured through affiliate supply chains utilizing Australian ore, Argentine brine, and recycled batteries. At the completion ceremony, Um Gicheon, CEO of POSCO Future M, said, "With the completion of this precursor plant, we have established a self-sufficient system connecting raw materials, intermediates, and cathode material. We will strengthen the domestic supply chain to respond to rapidly changing international situations and enhance the competitiveness of the national battery industry."