Posco to invest $200 mn to produce high-purity nickel EV battery material

[Photo provided by Posco]

Posco, the world’s fifth-largest steelmaker by output, will invest 230 billion won ($200 million) to build a nickel sulfate refining facility with an annual production capacity of 20,000 tons to lead the world’s secondary battery materials market that is set to burgeon on the surging electric vehicle demand.

The Korean steel giant will spend 170 billion won on constructing a nickel refining plant to produce 20,000 tons of high-purity nickel, a core chemical used in making cathode materials for lithium-ion batteries, per year by 2023 and another 60 billion won to set up an iron filtration system at its ferronickel affiliate SNNC Co.’s manufacturing site to produce nickel matte, an intermediate nickel product with a purity of 75 percent.

On Thursday, Posco shares closed 2.3 percent lower at 359,000 won.

Posco’s new nickel refining plant will be set up at its main steel mill in Gwangyang, South Jeolla Province, where SNNC is located nearby. SNNC, a joint venture between Posco and New Caledonia’s largest nickel producer SMSP, specializes in producing ferronickel – 20 percent nickel and 80 percent iron, a core component of stainless steel.

Once the new facilities are set up, SNNC will produce nickel matte products and then Posco will turn them into nickel with a purity of 99.9 percent or more and sell the final nickel products to secondary battery materials makers including its affiliate Posco Chemical Co.

The latest move is part of the Korean steel giant’s efforts to expand its secondary battery materials business with a goal to command 20 percent of the global market and achieve annual sales of 23 trillion won by 2030. It aims to ramp up production of nickel and lithium to 100,000 tons and 220,000 tons, respectively, by 2030, to churn out 400,000 tons of cathode materials and 260,000 tons of anode materials. Cathode and anode along with electrolyte and separator are the main components of Li-ion batteries for powering electric vehicles.

According to market researcher Wood Mackenzie, the worldwide EV sales exceeded 3 million units last year and the figure is projected to exceed 32 million units by 2030. In line with the surging EV sales, demand for high-purity nickel is also forecast to grow 23 percent on average annually and the industry would face a shortage starting 2025, it added.

Earlier in May, Posco signed a deal to buy a 30 percent in Australian nickel mining company Ravensthorpe Nickel Operation for $240 million to reinforce its battery materials value chain.

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