As legislative uncertainty looms in the United States, POSCO Future M is rethinking its joint venture approach with Chinese entities. Kim Joon-hyung, the President of POSCO Future M, laid out these recalibrated plans during a strategic presentation at the POSCO Center in Seoul’s Gangnam district. Should the forthcoming US Inflation Reduction Act (IRA) designate China as a Foreign Entity of Concern (FEOC), the firm is contemplating either acquiring shares in existing collaborations with Huayou Cobalt and CNGR or going solo with alternative investments.
At the event, the company unfurled a renewed corporate vision geared towards ‘adding value to the world through eco-friendly future materials’. POSCO Future M set an ambitious financial trajectory aimed at garnering 43 trillion won (around $32.5 billion) in sales and 3.4 trillion won (around $2.5 billion) in operating profits by 2030.
The company’s renewed strategy includes scaling production capacity of cathode materials, a pivotal battery component, to 1 million tons. This marks a 63% uptick from last year’s targets. Meanwhile, anode materials are set to see a more modest increase of 15% to 370,000 tons, focusing on value-added products like artificial graphite.
In a nuanced pivot, the firm is not merely concentrating on high nickel content materials but also venturing into mid-range products such as lithium iron phosphate (LFP) and lithium manganese iron phosphate (LMFP). “Should the IRA categorise China under FEOC, we would either increase our joint venture stake to 50:50 or consider an independent investment”, said President Kim.
Earlier this year, the company signed a Memorandum of Understanding (MOU) with China’s Huayou Cobalt, allocating approximately 1.2 trillion won (around $906.5 million) for constructing a production line for precursors and high-purity nickel raw materials. An additional 1.5 trillion won has been earmarked for a precursor joint venture with another Chinese entity, CNGR. POSCO Holdings, the parent company, has also outlined separate plans for nickel sulfate joint ventures.
President Kim expressed confidence in achieving the decade-long objectives, citing ongoing supply negotiations with automotive giants such as General Motors, Ford, and Honda. The optimistic profit rate of 7.9%, he elaborated, could be maintained through strategic raw material procurement and enduring contracts with the POSCO Group.
The overarching ambition, encapsulated in the company’s revamped vision, is to morph into a world-class purveyor of battery materials while underscoring eco-friendly innovation. This suggests that POSCO Future M is not just aligning itself with market dynamics but is also attuned to geopolitical and environmental factors.