Lithium ore powder, brought from Pilbara Minerals' mine in Australia, is stored in a 15,000-ton capacity warehouse of Posco Pilbara Lithium Solution. (Posco)

GYWANGYANG, South Jeolla Province -- South Korean steel giant Posco announced Tuesday that it has successfully established a full value chain for secondary battery materials and components.

“We anticipate that as the (electric vehicle) market grows, the value of raw materials within the battery supply chain will increase, and thus we plan to accelerate investments focused on high-profit raw materials,” said Baung Jin-chul, vice president of Posco Holdings, during a press conference held at the Yulchon First Industrial Complex in Gwangyang, South Jeolla Province.

“Posco will leverage the downturn in EV markets, a phenomenon often called the chasm, as well as falling mineral prices to acquire high-quality assets like lithium brine and mines at low cost to diversify our raw material supply chain.”

But Baung stressed that Posco has no intention to enter the battery manufacturing business directly.

“In line with our policy of not competing with our customers, we are focusing our strategy on providing customized total solutions, from resources to materials, tailored to the needs of our battery clients.”

As part of efforts to expand its capabilities in lithium and nickel production -- critical raw materials for secondary batteries -- Posco has invested in Pilbara Minerals, an Australian lithium mining company, in 2018, securing rights to high-quality lithium ore.

This strategic move has led to the establishment of Posco Pilbara Lithium Solutions, which operates South Korea's first lithium hydroxide production plant with an annual capacity of 21,500 metric tons. Posco also expects to complete a second plant of the same capacity by the end of this year, aiming to establish a production system with a total annual capacity of 43,000 tons.

In addition to lithium, Posco has also been advancing its nickel business. In May, Posco Holdings and China's CNGR established Posco CNGR Nickel Solutions, with a new nickel production plant set to commence operations by 2026. This facility will produce 50,000 tons of high-purity nickel annually. Additionally, Posco Future M, in collaboration with CNGR, is in the process of constructing a precursor plant at the same complex, with an annual capacity of 110,000 tons.

Posco's lithium operations extend to Argentina, where the company acquired the Hombre Muerto lithium brine project. In 2022, Posco commenced the first phase of a commercial brine lithium plant with an annual capacity of 25,000 tons. A second phase, also with a 25,000-ton capacity, is set to start by 2025.

Additionally, Posco recycles battery materials through its subsidiary Posco HY Clean Metal. This company, a joint venture with GS Energy and Huayou Cobalt, completed a recycling plant in Gwangyang last year. The facility can process 12,000 tons of black mass annually, recovering valuable metals such as nickel, cobalt, and lithium. Of note, these recovered materials will be supplied to Posco Future M for the production of new battery materials.

Meanwhile, Baung downplayed the serious business impact of the US Inflation Reduction Act.

"China's Huayou Cobalt, our partner, is a private company, so we do not anticipate any immediate effects," Baung said. "Nonetheless, we have included provisions in our joint venture agreements to mitigate any potential impacts should Huayou Cobalt be classified under FECO regulations."

By Hwang Joo-young (flylikekite@heraldcorp.com)