Posco Chemical said on Thursday that it won a long-term deal worth 1.05 trillion won to supply battery cathode for use in energy storage systems.
The deal is worth 52.9% of its revenue last year and will last until 2026.
The South Korean chemical firm didn’t reveal its customer but said its cathodes will be sold in South Korea.
Batteries for ESS mostly use NCM523 (nickel, cobalt and manganese in 5 to 2 to 3 ratio), unlike those for electric vehicles that are using more and more cathodes with higher nickel ratios.
This is because for ESS stability and life span are more important, while electric vehicles prioritize drive distance.
Posco Chemical had mostly produced its NCM622 cathode in Gwangyang for LG Energy Solution.
It will likely make its cathode for ESS at its facility in Gumi or older factories at Gwangyang.
As the deal is worth 1 trillion won divided into four years, this means Posco Chemical will have to use production lines with capacities of over 1GWh a year.
ESS battery makers in South Korea can that utilize this much volume are Samsung SDI and Kokam.
The recent Russian invasion of Ukraine has accelerated spending on ESS globally due to the energy shortage caused by the war.