POSCO Chemical to rely more on China for battery material

POSCO Chemical has signed a long-term supply contract with China’s Huayou Cobalt to access precursors, a key material for producing cathode for EV batteries.

According to industry sources said on April 1 that the contract will last until December 2022. Under it, Huayou will supply 76,300 tons to POSCO Chemical, with 17,850 tons being supplied this year. The value of the contract was not revealed, but market experts estimate it to be around 7.6 billion yuan, which is around KRW 1.3 trillion.

The precursors will be applied to Gen-2.5 N65 high-nickel NCM for EV batteries produced by LG Chem, with which POSCO Chemical signed a three-year contract in January this year to supply it with KRW 1.85 trillion worth of cathode.

POSCO Chemical has been taking various measures to secure a stable supply of battery ingredients. With Huayou, it established two separate joint ventures in 2019, one for cathode and the other for precursors. At home, it plans to build a cathode plant in Gwangyang with an annual capacity of 90,000 tons by 2022.

Industry experts, however, voice concern about becoming too dependent on external sources for precursors.

“Precursor technology is critical for battery makers, as precursors are a key element in cathode, and it decides the quality and durability of batteries,” said one market expert. “Many companies before POSCO went under because they failed to become independent.”

He added that POSCO is well-aware of these past pit-falls, and will most likely focus on indigenously producing battery material.

The Elec is South Korea’s No.1 tech news platform.