POSCO resets portfolio, expands into energy, lithium

POSCO Group Chairman Chang In-hwa speaks about the group's new "triple core" business portfolio during its CEO Investor Day in Seoul, Thursday. Courtesy of POSCO Holdings

POSCO Group on Thursday said that it will expand its core businesses into lithium production and renewable energy as it seeks to reposition itself as a leading supplier of Korea's key industrial resources.

Chairman Chang In-hwa hosted “CEO Investor Day," where he shared the group's new “triple core” business portfolio. It frames steel as an industrial resource; lithium, anode, cathode and rare earth minerals as strategic resources; and liquefied natural gas (LNG) and renewable energy as energy resources.

The most anticipated venture among POSCO investors was lithium. The group said it will introduce a production capacity of 173,000 tons per year by 2033 and become one of the world’s top five producers of the mineral. The group expects its lithium-based operating profit will reach 1.8 trillion won ($1.2 billion) by 2035.

POSCO produces brine lithium from Argentina, where its regional subsidiary, POSCO Argentina, turned profitable in March. The company has also acquired the Argentine government’s approval for a large investment incentive scheme. The group said it will make an early investment into the third and fourth stages of production pipeline construction for brine lithium, with annual capacity of 100,000 tons by 2033.

In ore-based lithium, POSCO has established a foundation to expand its smelting business through a joint venture agreement with Australia’s Mineral Resources, securing more than 187,000 tons of lithium concentrate annually. The group expects an annual profit of 200 billion won from the business.

For steel, POSCO will initiate full-scale overseas growth investments to overcome stagnation of the domestic demand market. The group will expand its annual production capacity to 10 million tons by 2031 in promising markets such as India, the United States and Indonesia. The group plans to funnel profits from the business into reinvestments for a low-carbon transition in Korea.

As for energy resources, which have become POSCO’s new core business, the group will pursue expansion strategies for an LNG value chain. Under the renewable energy business, the group will initiate a full-scale entry into domestic offshore wind power and overseas solar power markets, taking the lead in the country's energy security.

POSCO said that it will invest 16.7 trillion won until 2028 for the triple core businesses. Chang predicted the group will net 187 trillion won in sales and an operating profit of 13.1 trillion won by 2035.

“Now, when external uncertainty is deepening due to supply chain instability and the low-carbon transition is in acceleration, is the time to create new growth opportunities through bold innovation of our business portfolio," Chang told investors.

"Following steel and materials, we will expand our business domain to those resources to lead national industrial security and strengthen the supply chain."