With China’s CNGR
POSCO Group is aggressively growing its secondary battery materials business by investing 1.5 trillion won (US$1.2 billion) to build a nickel and precursor production plant in Pohang, North Gyeongsang Province, Korea in partnership with a Chinese company. The precursor is a material just before being made into a cathode material and is manufactured by mixing minerals such as nickel and cobalt.
POSCO Holdings and POSCO Future M announced on June 21 that they have signed a joint venture agreement (JVA) with China’s CNGR to produce nickel and precursors for secondary batteries. CNGR is the world’s No. 1 precursor maker in terms of market share.
Under the JVA, POSCO Holdings and CNGR will establish a nickel refinery with a 60-40 ratio to produce nickel sulfate. POSCO Future M and CNGR will set up a precursor production company with a 20-80 ratio.
The investment will total 1.5 trillion won. The nickel refining and precursor production subsidiaries will have production capacities of 50,000 tons and 110,000 tons, respectively. This is enough raw material to make batteries for 1.2 million electric vehicles.
The two production subsidiaries broke ground for their factories in the fourth quarter of this year at Yeongilman 4 Industrial Complex in Pohang, Korea and are aiming to start volume production at the factories in 2026.
In particular, precursors are mostly imported with domestic production accounting for only about 13 percent. Therefore, the joint venture is expected to strengthen POSCO Future M’s business competitiveness by enabling it to stably procure precursors.
POSCO Future M has signed long-term supply contracts for cathode materials worth more than 100 trillion won with domestic and overseas customers such as LG Energy Solution, Samsung SDI, and Ultimate Cell, so it is important to stably secure intermediate materials such as key minerals and precursors.
The introduction of the Inflation Reduction Act (IRA) in the United States is forcing Korean battery makers to change production sites to the United States or countries that signed free trade agreements (FTAs) with the United States as they need to decrease their dependence on China in the production stage of key minerals for batteries.