THE KOREA ECONOMIC DAILY, GLOBAL EDITION

POSCO Group, which owns South Korea’s largest steelmaker, plans to invest 25 trillion won ($20 billion) to secure a stable supply of key raw materials used in electric vehicle batteries amid a growing trend of resource nationalism worldwide.

POSCO Holdings Inc., the investment holding company of the steel giant, will make the investment until 2030 in rechargeable battery projects, including purchasing stakes in battery material companies, mineral mines and related facilities throughout Asia.

The huge spending plan will help POSCO build its own battery metal supply chain and reduce Korea’s heavy reliance on Chinese companies, according to the company.

“China is sweeping the lithium and other battery materials market. It’s literally war,” Lee Kyung-sub, senior vice president in charge of POSCO Holdings’ secondary battery business, said in an exclusive interview with The Korea Economic Daily on Wednesday.

It’s the first time POSCO has unveiled its specific investment plans since POSCO Group Chairman and Chief Executive Choi Jeong-woo last year said the conglomerate aims to become the world’s top battery materials player by 2030.

Lee, head of POSCO’s investment strategy office, said Wednesday the company will build a synthetic graphite plant in the US with an investment of between 300 billion won and 400 billion won.

Graphite is used to make anode, a key EV battery component.

The company is also looking at five to six lithium mines in Australia for investment, he said.

Lithium is a core mineral used to make cathode, another battery component that accounts for up to 40% of battery manufacturing costs.

The executive said POSCO also plans to invest in a nickel mine in Indonesia and build a nickel production facility in Brazil, while talks to make an equity investment in an Asian battery company are at an advanced stage.

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With the investment, POSCO aims to establish facilities to produce 605,000 tons of cathode, 322,000 tons of anode and 300,000 tons of lithium a year by 2030.

The company expects 9 trillion-10 trillion won in operating profit on sales revenue of 41 trillion won in 2030 from its battery business alone. In 2021, POSCO Holdings posted 9.24 trillion won in overall operating profit on a consolidated basis.

“This is not a wild dream. We expect battery materials to lead the Korean economy over the next decade or two just like chips, shipbuilding and chemicals did over the past two decades,” said Lee, who leads a team of 45 battery specialists at POSCO.

He said the Korean government should redouble its efforts to protect Korean battery makers from growing competition during trade talks with other countries.

Korea is home to leading battery makers, including LG Energy Solution Ltd., the world’s second-largest, SK On Co. and Samsung SDI Co., which heavily rely on Chinese companies for battery raw materials.

At the forefront of POSCO's long-term project is POSCO Chemical Co., the group’s secondary battery materials unit.

Led by the subsidiary, POSCO has actively pursued stake purchases in overseas mineral projects and mines, including the salt flat of Salar del Hombre Muerto in northwest Argentina, which holds large lithium reserves.

Lee said POSCO’s aggressive investment will also boost the company’s enterprise value.

POSCO Holdings’ market capitalization of 24 trillion won is double its 2021 earnings before interest, taxes, depreciation and amortization (EBITDA) of 12.82 trillion won.

“Secondary battery materials makers usually have an EBITDA multiple of 10 to 20, which means we have great upside potential,” he said.

Write to Ik-Hwan Kim at lovepen@hankyung.com
In-Soo Nam edited this article.