POSCO Future M withdraws joint investment with China’s Huayou Cobalt

[Courtesy of POSCO Future M Co.]

POSCO Future M Co, a South Korean manufacturer of cathodes for electric vehicle (EV) batteries, announced on Wednesday that it decided to withdraw its investment plan to build a 1.2 trillion won ($896.95 million) precursor plant in Pohang, North Gyeongsang Province, with China‘s Huayou Cobalt Co.

POSCO Future M had signed a memorandum of understanding (MOU) with Huayou Cobalt, North Gyeongsang Province, and the city of Pohang to construct a production line for precursors and high-purity nickel materials at the Blue Valley National Industrial Complex, with an aim to complete construction in 2027.

Precursors are considered a key material that accounts for 60 to 70 percent of the cost of cathode materials.

The withdrawal comes amid sluggish demand for EVs.

POSCO Future M noted on Wednesday that it made the decision as it judged it would be difficult to secure profitability due to the slowdown in EV demand.

Some industry insiders also suggest that the decision reflects a strategy to reduce risks associated with China, given that the U.S. Inflation Reduction Act (IRA) designates China as a Foreign Entity of Concern (FEOC).