Posco Holdings ups investment in Argentina lithium to $4 billion

Industry

Published: 23 Mar. 2022, 16:12 Updated: 23 Mar. 2022, 17:01

Posco Holdings ups investment in Argentina lithium to $4 billion

Executives of Posco Holdings and officials from the Argentina government including Chairman Choi Jeong-woo, second from left in the front row, and Alberto Angel Fernandez, second from right in the front row, pose for a photo after signing a memorandum of understanding on the expansion of the production capacity of its lithium hydroxide factory in Argentina. [POSCO HOLDINGS]

Posco Holdings will invest $4 billion in a lithium hydroxide factory project in Argentina.

The announcement comes about three months after the company initially said it will spend $830 million to establish the facility. Posco Holdings is increasing the investment amount to increase production capacity on expectations of higher demand.

The lithium hydroxide plant is expected to start operations in the first half of 2024, with 25,000 tons of annual capacity. Posco will raise the annual capacity to 100,000 tons by the end of 2030.

Lithium is a core ingredient in battery cathodes. 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.

Lithium hydroxide was selling for 175,000 yuan ($27,500) per kilogram Wednesday, a 217 percent jump from last year's average price, based on data from the Korea Mine Rehabilitation and Mineral Resources Corporation. The Russian invasion of Ukraine drove the price surge, and some analysts forecast for prices to remain high.

Posco Holdings Chairman Choi Jeong-woo signed a memorandum of understanding with the Argentinian government for the expansion on Monday, with President Alberto Fernánde and Minister of Productive Development Matías Kulfas attending.

"Posco, as the first Asian steelmaker to announce carbon neutrality by 2050, has been taking a leap forward to become a leading company in eco-friendly future materials by expanding the business to secondary battery materials, lithium, nickel and hydrogen," Choi said during the meeting. "Lithium, the core material for EV batteries, is a key business area that will drive the future growth of Posco."

Posco's demo plant manufacturing lithium hydroxide near the Hombre Muerto salt lake in Argentina. [POSCO HOLDINGS]

The company acquired mining rights for the Hombre Muerto salt lake in 2018 from Applecross, Australia's Galaxy Resources for $280 million. It discovered that the lake has 13.5 million tons of lithium reserves, or six times the amount it was projected to have in 2018. Following the discovery, Posco started operating a small demo plant near the lake, extracting lithium and testing commercial viability ahead of the investment.

Argentina ranks fourth in the world in terms of lithium reserves and third in production volume.

In April last year, Posco established the Posco Lithium Solution subsidiary and broke ground on a lithium hydroxide-extracting plant in Gwangyang, South Jeolla, which has a production capacity of 43,000 tons per year.

The company aims to have a total lithium production capacity of 110,000 tons by the end of 2025 and 220,000 tons by 2030.

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