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POSCO Chemical builds a production plant in China for cathode and precursor materials, entering the overseas market in earnest
2021.08.25
A view of the joint venture formed by the POSCO Group and Huayou Cobalt in Tongxiang City, China. The venture operates a cathode plant and a precursor plant with an annual production capacity of 5,000 tons each. POSCO Chemical will build a cathode plant and a precursor plant that can manufacture 30,000 tons each to further expand the current capacity of both plants up to 35,000 tons.
POSCO Chemical has set out to build the first overseas location for secondary battery cells in China, the largest battery market in the world, as it advances into the global market in earnest.

POSCO Chemical held a board of directors meeting on August 25, 2021 and decided to invest a total of 281 billion won to extend the production line at a joint venture in China run by the POSCO Group and Huayou Cobalt, which produces cathode materials and precursors.

The venture will build production lines for both cathodes and precursors with an annual capacity of 30,000 tons, to enlarge the production capacity up to 35,000 tons. The company will break ground in the second half of this year and start manufacturing high-nickel cathode materials for EVs in 2023. With 35,000 tons of cathode materials, you can power approximately 390,000 EV batteries that are used in 60 kWh cars.

POSCO and Huayou Cobalt founded Zhejiang POSCO-Huayou, a cathode material production company, and Zhejiang Huayou-POSCO, a precursor production company, in Tongxiang City, Zhejiang Province, China in March 2018. The two companies are currently operating production plants that produce 5,000 tons a year.

According to the market research firm SNE, major battery makers in China have accounted for 43% of the global EV battery market in the early half of this year. China is a critical strategic market where POSCO Chemical made 48% of its entire sales for secondary cells last year.

By producing and selling cathode materials directly in China, the home of global battery giants, POSCO Chemical has laid the foundation to respond to demand in a timely manner and expand its customer base. Cathode materials made in the joint ventures will be supplied to the local battery companies and Korean battery makers in China.

With the expansion of the precursor plant, POSCO Chemical will improve the supply and demand stability of essential raw material for cathodes, increase the internalization rate, and strengthen its partnership with Huayou Cobalt. Huayou Cobalt is the top cobalt manufacturer in the world, which owns multiple mines for raw materials used in secondary battery cells, producing about 40,000 tons of cobalt every year.

Following the entry into China, POSCO Chemical is also preparing to establish corporations in the US and EU where demand for EVs is soaring. Under the plan, the company will build a stable global supply chain producing 160,000 tons in Korea and 110,000 tons abroad by 2025, and cement the market leadership.

POSCO Chemical CEO Min Kyung-zoon said, “POSCO Chemical will accelerate the speed of investment by preemptively responding to the fast-growing market. As a materials company that boasts differentiated business capabilities based on the synergy created by producing both cathode and anode materials, which are core battery materials, and having secured raw materials at the group level, we will become a leader of the worldwide battery value chain, which is undergoing transformation in all regions.”

 Outline of investment by the POSCO Group on cathode materials business in China

Target Companies

Investments

Shares

Notes

Zhejiang POSCO-Huayou (cathode material producer)

176.9 billion won

POSCO Group 60%,

Huayou 40%

Annual cathode production capacity of 30,000 tons

Zhejiang Huayou-POSCO

(precursor producer)

104.1 billion won

POSCO Group  40%,

Huayou 60%

Annual precursor production capacity of 30,000 tons

* POSCO Group : POSCO and POSCO Chemical  

*Cathodes : One of the four essential battery materials that determine the performance and capacity of batteries. It accounts for about 40% of the battery manufacturing cost.
*Precursors : Intermediate material for cathodes made by mixing raw materials including nickel, cobalt, manganese, and aluminum. The stable supply and demand of precursors is becoming more important than ever.
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