SK, POSCO deepen business partnership

Chiefs meet to discuss battery, energy and social value collaboration

By Nam Hyun-woo

POSCO and SK appear to be joining forces on their battery and energy businesses, as the chairmen of the two conglomerates had a closed-door meeting to discuss their common goals, according to industry officials, Friday.

Since both POSCO and SK are seeking expansions in their respective rechargeable batteries, with POSCO Chemical focusing on materials for batteries and SK Innovation manufacturing batteries, the officials said the chance of their partnership is high.

POSCO Chairman Choi Jeong-woo said he met SK Group Chairman Chey Tae-won because POSCO has common ground with SK Group.

“We talked about common goals that both groups should pursue,” Choi told reporters on his way to the office, Friday. “There could be many stories on the common values the two groups share.”

According to officials, Choi and Chey met on Aug. 13 with the presence of CEOs of their units including POSCO Energy, POSCO Chemical, POSCO International, SK E&S and SK Telecom.

Choi said POSCO's pursuit of corporate citizenship and SK Group's emphasis on corporate social value have a lot in common, thus he and Chey “shared good opinions on this agenda.”

Though Choi said they did not discuss specific businesses, industry officials said Choi, head of Korea's No. 6 conglomerate, and Chey, leader of the No. 3 chaebol, and CEOs of their units would not have met unless there is a major business issue.

“Chances of the two groups' collaboration are open because both POSCO and SK are interested in battery and energy businesses,” a conglomerate official said.

The most likely sector is the battery business. POSCO Chemical produces cathodes and anodes, which are core parts of lithium-ion batteries.

As their demand is expected to see a sharp increase in global demand amid the spread of electric vehicles, POSCO completed its first overseas cathode plant in Zhejiang Province, China, earlier this month. It also completed a domestic cathode plant with yearly output of 6,000 tons last year.

Those materials are used for SK Innovation's rechargeable batteries. SK Innovation is making its full efforts to enhance its presence in the global battery market, with a plan to expand its current output of 5 gigawatt-hours to 100 gigawatt-hours by 2025.

If happens, industry officials said POSCO-SK partnership will be focused on POSCO's stable supply of battery materials to SK Innovation, which will prevent both firms from being swayed by external trade uncertainties.

Another business in which they can join force is energy. SK E&S, the group's LNG unit, has been importing natural gas through POSCO's LNG Terminal in Gwangyang, South Jeolla Province, for the past 15 years.

Both Choi and Chey have been underscoring corporate social responsibility. Earlier this year, SK Group adopted social value as part of its key management index, while POSCO Chairman Choi has been making a series of moves highlighting the steelmaker's social responsibility.