On October 24, POSCO finalized a joint venture contract with China’s Huayou Cobalt, a cathode material and precursor manufacturing corporation, at a regular board meeting held at the POSCO Center in Daechi-dong, Seoul on January 24. Accordingly, POSCO will begin production of cathode materials and precursors, key materials in China with the largest lithium-ion battery demand in the world.
The approval of this contract will enable POSCO to establish two joint venture corporations -- a precursor production corporation and a cathode material production corporation -- in Tongxiang City, Zhejiang Province together with Huayou Cobalt.
The joint venture will become able to strengthen its presence in China, the world's largest lithium-ion battery market, by directly manufacturing and selling cathode materials using precursors in China. The precursor is produced by combining cobalt, nickel, and manganese in an upper process of cathode material production. When the precursor is combined with lithium, a cathode material comes out as the final product.
POSCO with high-quality cathode material production technology will invest for a 60% stake in the joint venture to produce cathode materials and Huayou Cobalt which can supply cobalt, nickel and manganese for a 40% stake. Each joint venture will operate a production line for precursor and anode materials of 4600 tons per year beginning in the second half of 2020.
Huayou Cobalt is the world's largest cobalt producer which can meet about 50% of cobalt demand for lithium-ion batteries worldwide. The company also has nickel mines as well as cobalt mines.
POSCO ESM's Gumi Cathode Material Factory will be able to boost its competitiveness as the factory will be able to stably receive not only precursors but materials for precursors such as cobalt, nickel and manganese. The deal will also empower Huayou Cobalt to expand its business into production and sales of cathode materials and sales by taking one step further from production and sales of materials for cathode materials.
The toughening of eco-friendly policies by countries around the world is fueling demand for electric vehicles, industrial energy storage devices (ESS), and large capacity batteries for IT systems and equipment.
Therefore, the market of cathode materials which are an essential material for lithium-ion batteries is projected to more than quadruple from 210,000 tons in 2016 to 860,000 tons in 2020.
The lithium-ion battery material business, which POSCO is promoting as one of its future new growth business items, is expected to get more momentum as joint investment in the precursor and cathode material plants. The lithium-ion battery is composed of a cathode material (including lithium), an anode material, a separator, and an electrolyte. POSCO directly produces lithium, cathode materials and anode materials.