The two companies have agreed to invest 1.5Tn Won (US$1.2Bn) in nickel sulphate and precursor facilities.

The JV agreement to set up facilities in Pohang with China’s CNGR Advanced Materials was signed by POSCO Holdings, the conglomerate’s holding company, and POSCO Future M, the group’s battery ingredients manufacturer. POSCO Holdings will establish a nickel refining JV (6:4) with CNGR to produce 50ktpy nickel sulphate (11.2kt Ni-in-sulphate). Additionally, POSCO Future M will create a separate JV (2:8) with CNGR to construct a facility to produce 110ktpy cathode precursors utilising the nickel sulphate feedstock. The joint ventures will start construction of the plants during Q4 2023 with full production expected by 2026. POSCO stated that the material will be sufficient for up to 1.2M EVs.

The successful development of these facilities will provide POSCO with additional cathode precursor material (pCAM), supporting its target for cathode production capacity of 610ktpy by the end of the decade. The JV is also expected to benefit from US IRA tax credits, which require 40% of the value of the battery raw materials to be sourced from the US or a free trade partner (including South Korea). Despite Chinese company CNGR’s 80% ownership of the South Korean pCAM JV, the US government has yet to exclude battery materials in which Chinese companies have stakes from the tax break.

POSCO has very been active in its efforts to secure the raw materials required for its cathode materials supply chain. Later this year, the conglomerate will start producing nickel sulphate based on converted ferronickel from its nickel processing plant in Gwangyang, South Korea. It also recently signed deals to develop nickel matte and HPAL processing capacity in Indonesia and the group holds a 30% stake in First Quantum Minerals’ Ravensthorpe nickel and cobalt operation in Australia.