Posco Future M to invest $533 million to build battery materials plant

Posco Future M will invest 683.4 billion won ($533 million) to build a high-nickel cathode battery materials plant in Gwangyang, South Jeolla.

A rendered image of Posco Future M's cathode production plant in Pohang, North Gyeongsang [POSCO FUTURE M]

Posco Future M will invest 683.4 billion won ($533 million) to build a high-nickel cathode battery materials plant in Gwangyang, South Jeolla.

It is the second nickel-cobalt-aluminum (NCA) cathode plant as the company broke ground on a plant in Pohang, North Gyeongsang in April.

The plant will have an annual production capacity of 52,500 tons. Construction will begin in the first half of 2024, with the aim of completing the facility in the second half of 2025.

NCA cathodes are known for their efficiency in maximizing a battery's energy density and output. Cathodes are one of four core materials in batteries that dictate their price, accounting for up to 40 percent of a battery's cost.

The investment in the new plant comes after the company signed a 40 trillion-won, 10-year supply deal with Samsung SDI in late January.

Samsung SDI produces NCA batteries, unlike its rival LG Energy Solution which concentrates on nickel, manganese and cobalt batteries.

With the latest investment, Posco Future M's NCA battery annual capacity will be boosted to 80,000 tons by the end of 2025. Combining all types of cathodes, its capacity will grow to 320,000 tons.

Posco Holdings Chief Strategy Officer Jeong Ki-seop, on Monday, said the company would pour 46 percent of its total investments into the secondary battery business to boost Posco Future M's cathode production capacity to 1 million tons by 2030, around a 10-fold jump from its current level.

Posco Future M has landed 106 trillion won of orders so far from various major battery makers including Samsung SDI, LG Energy Solution and Ultium Cells.

Posco Future M shares surged 10.3 percent to close at 598,000 won Tuesday.

BY SARAH CHEA [chea.sarah@joongang.co.kr]