POSCO Chemical inks $689 mn deal with Ultium Cells for anode materials supply

Artificial graphite anode materials [Photo provided by POSCO Chemical]

POSCO Chemical will supply artificial graphite anode materials for Ultium Cells to produce electric vehicle batteries in a $689 million deal, which also marks its first artificial anode supply deal since it succeeded in its commercial production late last year, the Korean company said in a regulatory filing on Monday.

The contract value represents 47.2 percent of POSCO Chemical annual revenue, according to the filing.

Under the contract, the Korean chemical firm of the country’s steelmaking and materials holding company POSCO Holdings will provide artificial graphite anode materials to be produced at its Pohang plant in North Gyeongsang Province over the next six years until 2028 for the U.S. joint venture between GM and LG Energy Solution.

Compared to natural graphite, artificial graphite anode materials have advantages in battery-charging speed and lifespan, but Korea has relied on China and Japan for the materials due to difficulties in procuring raw materials and high manufacturing costs.

POSCO Chemical continued efforts for local commercial production of artificial graphite anode materials and it completed a manufacturing facility in December last year with an annual capacity of 8,000 tons. The deal with Ultium Cells represents Korea’s successful localization in the supply of artificial graphite anode materials for global EV batteries, which has been almost monopolized by Chinese companies.

According to industry data, 92 percent of global anode materials came from China last year.

POSCO Chemical is seeking more partnerships with carmakers and battery companies in North America in compliance with the U.S. Inflation Reduction Act. The company plans to increase its annual global anode material production capacity from 82,000 tons this year to 170,000 tons in 2025 and 320,000 tons in 2030.

POSCO Chemical shares were up 0.24 percent at 207,000 won on Tuesday morning.