Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
POSCO Chemical to invest $240.6 million in China
The joint venture factory run by POSCO and Huayou Cobalt, China's largest cobalt producer, in the Chinese city of Tongxiang, is seen in this undated photo. POSCO Chemical, a POSCO affiliate, will spend 281 billion won ($240.6 million) to raise the factory's annual production capacity from the current 5,000 tons to 35,000 tons. Courtesy of POSCO Chemical
By Yi Whan-woo
By Yi Whan-woo
POSCO Chemical said Wednesday that it will invest 281 billion won ($240.6 million) in China to help its parent company, POSCO, expand its presence there in the production of key materials for electric vehicle (EV) batteries.
The investment will be POSCO Chemical's first overseas project on secondary battery materials, which POSCO has strategically been nurturing in order to adapt to the global shift to eco-friendly businesses while capitalizing on its steel manufacturing expertise.
The investment decision was made during POSCO Chemical's board of directors meeting.
“We will act preemptively and speed up the pace of our investments in tandem with the rapidly growing market,” POSCO Chemical CEO Min Kyung-joon said, noting that China has the largest market share in EV batteries with 43 percent. “We will accordingly help POSCO play a leading role amid the restructuring of global value chains in the battery business.”
The chemical arm of POSCO will spend 281 billion won to add manufacturing lines to a joint venture factory operated since August 2019 by POSCO and Huayou Cobalt, China's largest cobalt supplier, in the Chinese provincial city of Tongxiang.
The factory has an annual capacity to produce 5,000 tons each of cathode and precursor materials. The former is the most important material for battery performance and accounts for 40 percent of the manufacturing costs of a battery. The latter refers to the combination of nickel, cobalt, manganese and aluminum used as an intermediate good for cathode.
The construction of new manufacturing lines will begin later this year and will be completed by 2023.
The new lines are expected to boost the POSCO-Huayou Cobalt joint venture and increase the annual output of each cathodes and precursors to 35,000 tons.
The volume is enough to manufacture about 390,000 EVs per year. It will be supplied to Chinese battery makers as well as to their Korean competitors operating in China.
As a broader strategy, POSCO Chemical seeks to produce 160,000 tons of battery materials in Korea and 110,000 tons abroad by 2025.
POSCO aims to make 17 trillion won in sales from cathode and anode materials production by 2030.