POSCO International launches $16 mil. CVC fund for rare earths

POSCO International's headquarters in Songdo, Incheon / Courtesy of POSCO International

POSCO International said Monday it is accelerating efforts to build a stable global supply chain for heavy rare earth elements, a key component in electric vehicle (EV) motors, through the launch of its first corporate venture capital (CVC) fund.

The company said it has established a 25 billion won ($16 million) CVC fund in partnership with POSCO Investment, marking its first such initiative. As part of the fund’s initial deployment, it will invest 8 billion won in a domestic company specializing in rare earth separation and refining.

The investment is aimed at securing a stable supply of heavy rare earth materials such as dysprosium and terbium, which are essential for high-performance permanent magnets used in EV drive motors. These elements play a critical role in maintaining magnetic strength at high temperatures but are largely produced and refined in a limited number of countries, posing structural risks to global supply chains.

The Korean firm said the investee company has proprietary technology capable of refining heavy rare earths into oxides with purity levels exceeding 99.5 percent and further reducing them into metals with 99.9 percent purity.

In parallel, POSCO International is expanding its global sourcing network with a focus on Southeast Asia. The company plans to launch a $30 million joint venture with a Malaysian partner for rare earth separation and refining, while also participating in a separate project in Laos.

Through these initiatives, the company expects to secure approximately 4,500 tons of refined rare earth materials annually from the region, equivalent to about $230 million in value. It also plans to scale up production capacity to more than 10,000 tons through additional investments.

Building on this supply base, POSCO International will also move into the North American market. The company plans to partner with U.S.-based ReElement Technologies to establish a rare earth refining plant with an annual capacity of 3,000 tons, with mass production slated to begin in the second half of next year.

In addition, it aims to secure an annual production capacity of 3,000 tons of permanent magnets by 2028, further strengthening its foothold in the EV components sector.

A company official said the investments are part of a broader strategy to complete the entire rare earth value chain — from mining and refining to permanent magnet production — and link it with motor core manufacturing to enhance competitiveness in key EV components.

“Through the CVC fund, we will continue to identify and invest in promising companies with strong business synergies,” the official said.