POSCO Future M to produce China-free precursors in Gwangyang

POSCO Future M CEO Eom Gi-chen speaks during the completion ceremony of the company's precursor plant in Gwangyang, South Jeolla Province, Tuesday. Courtesy of POSCO Future M

GWANGYANG, South Jeolla Province — POSCO Future M, the steelmaking group's battery materials unit, celebrated the completion of a precursor plant in Gwangyang, South Jeolla Province, Tuesday.

Built on a 22,400-square-meter site adjacent to the company's cathode materials facility, the new plant can produce 45,000 tons of precursors annually. The capacity is enough to power batteries for about 500,000 electric vehicles (EVs).

Precursors are processed materials in the final stage before being combined with lithium to form cathode active materials.

According to POSCO Future M, all precursors produced at the new plant will be used to manufacture cathode materials for Ultium Cells, a U.S. battery joint venture between LG Energy Solution and General Motors.

"With POSCO Group's nickel supply chain and the recent completion of the precursor plant, we can now independently source raw materials and produce semi-processed goods and cathode materials," POSCO Future M CEO Eom Gi-chen said. "Amid changing global supply chain policies, the Gwangyang precursor plant will contribute to the competitiveness and growth of Korea's battery industry."

Data compiled by energy market tracker SNE Research showed that as of March, Chinese-made precursors accounted for over 90 percent of the entire precursors used in Korean battery production.

Starting this year, however, batteries containing Chinese-made precursors are no longer eligible for tax benefits in the U.S. market, due to the Inflation Reduction Act that designates Chinese companies as foreign entities of concern, which the U.S. government identifies as national security risks.

As a result, POSCO Future M's new facility is expected to enhance the company's supply chain competitiveness.

Regarding the sourcing of minerals to produce precursors, the Korean company will also be independent of Chinese suppliers.

POSCO Future M said it can source non-Chinese nickel from POSCO Group's other affiliates.

POSCO, the group's steelmaking arm, is capable of producing high-purity nickel sulfate with processed nickel from countries other than China.

POSCO HY Clean Metal, the group's wholly-owned battery recycling subsidiary, will also supply nickel sulfate extracted from used batteries. Originally established as a joint venture with China’s Huayou Cobalt, the company became fully owned by POSCO Group as it acquired its Chinese partner's shares last month.

For lithium sourcing, POSCO Future M can obtain the mineral from POSCO-Pilbara Lithium Solution, which processes Australian minerals, and POSCO Lithium Solution, which produces lithium hydroxide using brine extracted from a saline lake in Argentina. POSCO HY Clean Metal can also supply lithium extracted from waste batteries.

Roh Su-jin, leader of POSCO Future M's Gwangyang precursor plant, shows facilities at the factory in Gwangyang, South Jeolla Province, Tuesday. Courtesy of POSCO Future M

Amid the U.S. government's efforts to exclude China from the EV battery supply chain, POSCO Future M has continued to reduce its dependence on Chinese materials.

Last September, the company scrapped its plan to establish a precursor joint venture with Huayou Cobalt in Pohang, North Gyeongsang Province.

POSCO Holdings, the group's holding firm, also liquidated a nickel joint venture with China's CNGR Advanced Material earlier this year, while POSCO Future M delayed a separate precursor joint venture with the Chinese firm by a year, postponing it to January 2026.

"The plans to invest in joint ventures with CNGR were part of a group-wide strategy to complete the supply chain, from sourcing and refining nickel to precursor production," Lee So-young, head of POSCO Future M's business strategy planning group, said. "Given the uncertainties in the early stages of the investment, we have been in talks with our partner to find the optimum point."