POSCO Chemical bags US$10.8 bln additional deal to supply EV battery component to GM

All News 11:18 July 28, 2022

SEOUL, July 28 (Yonhap) -- POSCO Chemical Co. will supply a key electric vehicle (EV) battery component to General Motors Co. for three years starting 2023, in an additional US$10.8 billion deal expected to give a boost to the South Korean firm's pivot to the battery materials sector.

POSCO Chemical will supply high-nickel cathodes to Ultium Cells LLC, the U.S. joint venture between GM and South Korean battery maker LG Energy Solution, from 2023 through 2025, the chemical maker said in a release on Thursday.

The cathode materials will be produced at its Gwangyang plant, about 400 kilometers southwest of Seoul, which touts 60,000 tons in annual production capacity.

Cathodes are a key component used in lithium-ion batteries for electric vehicles. They consist of nickel, lithium, cobalt and manganese and account for more than 40 percent of the production cost of an EV battery cell.

The latest supply deal would increase POSCO Chemical's cathodes supply to GM to some 90,000 tons a year. POSCO Chemical said in May it signed a 30,000-ton cathode supply contract with GM for an eight-year period starting 2025, valued at 8 trillion won (US$6.1 billion).

POSCO Chemical and GM have launched their own joint venture, Ultium CAM, to build a cathode plant in Quebec, Canada, by 2024.

POSCO Chemical said it "expects to emerge as a key EV battery component supplier in North America where the EV industry is growing rapidly."

GM is ramping up its electrification efforts, aiming to manufacture more than 1 million EVs a year in North America by 2025, according to POSCO Chemical.

To meet the burgeoning demand in EV battery materials, POSCO Chemical said it decided to invest 326.2 billion won to expand its cathode precursor production facility by an annual 45,000 tons in its Gwangyang complex.

A precursor is an intermediate compound made from combining battery components like nickel, cobalt and manganese, to produce cathodes that make up a key part of lithium-ion batteries used in electric vehicles.

POSCO Chemical plans to increase its precursor production capacity to 220,000 tons a year in 2025 from the current 15,000 tons. It is looking at ways to localize the production in foreign countries that produce the raw materials for precursors.