Posco breaks ground on lithium hydroxide plant

Posco CEO Choi Jung-woo, third from left, takes part in a groundbreaking event for a lithium hydroxide plant in Gwangyang, South Jeolla, Wednesday. [POSCO]

Steelmaker Posco started construction on a lithium hydroxide plant, an important material used in electric vehicle (EV) batteries.

Located on 196,000 square meters of land in Gwangyang, South Jeolla, the plant will produce 43,000 tons of lithium hydroxide per year, with minerals imported from Australia and other countries. This is enough to make batteries for one million EVs, Posco said.

Construction will be completed on the 760 billion won ($678 million) facility in 2023.

Lithium is the core ingredient of a battery cathode. Rechargeable batteries usually contain either lithium hydroxide or lithium carbonate. While the latter is preferred for IT devices, lithium hydroxide is used in EV batteries as it helps batteries last longer.

RK Equity, a New York-based investment company specializing in lithium ion batteries, forecasts that demand for lithium hydroxide batteries will exceed lithium carbonate batteries starting in 2024. By 2028, hydroxide lithium batteries should account for 64 percent of the market, it predicts, with lithium carbonate batteries accounting for the rest.

Posco has been investing in the EV battery business for years, mainly supplying materials and components to battery makers. Posco Chemical, for example, supplies cathodes and anodes to local battery makers. Posco is trying to diversify its businesses away from steel.

“The EV material business is a growth engine for the entire group,” said Posco Chairman Choi Jung-woo in a factory groundbreaking ceremony, Wednesday.

“Mass producing lithium hydroxide is a big part of that plan. Localizing supply is an important task for us and the entire local EV industry, which is competing in the global market.”

According to Posco, lithium supplies for local EVs have been imported from China.

The company is also building lithium production facilities at Hombre Muerto salt lake in Argentina, which it acquired in 2018. According to Posco’s estimate, the lake contains 13.5 million tons of lithium reserves that can be made into lithium hydroxide or lithium carbonate. The factory will be completed in 2023.

When the plants in Gwangyang and Argentina are both completed, Posco will be producing 70,000 tons of lithium products per year, the company said. Its aim is to expand this figure to 130,000 tons a year by 2026 and 220,000 tons by 2030.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]