Posco Chemical wins 13.8 trillion won cathode order from General Motors

Posco Chemical's Gwangyang plant in South Jeolla [POSCO CHEMICAL]

Posco Chemical won a 13.8 trillion won ($10.6 billion) cathode order from General Motors, the company said Thursday.

The chemical company will supply Ultium Cells cathodes for three years starting from 2023. Ultium Cells is a 50-50 joint venture between LG Energy Solution and General Motors. It is currently building three electric vehicle (EV) battery plants in the United States.

The cathodes will be produced in Posco Chemical's Gwangyang plant in South Jeolla. The plant currently has an annual capacity of 30,000 tons, but Posco aims to increase that to 90,000 tons by the end of the year. That will make it the largest cathode material factory in the world for a single plant, the company said.

Cathodes are one of four core materials in lithium-ion batteries, which power EVs. Made of lithium, nickel, cobalt and manganese, cathode materials account for 40 percent of the production cost of an EV battery.

The deal brings Posco Chemical's orders from General Motors to a total of some 21.8 trillion won. The two companies signed an 8.04 trillion won cathode deal in May.

To cover the growing orders, Posco Chemical said it will invest some 326.2 billion won to build a plant for battery precursors at its Gwangyang factory. The board of directors approved the agenda on Wednesday.

Precursors are raw materials used to make cathodes and are produced by combining materials such as nickel, cobalt and manganese. They account for over 60 percent of the cost of cathodes.

Ground will be broken within the year, with the goal of completing the plant in 2024.

Posco Chemical's current production capacity of battery precursors stands at 15,000 tons. The company aims to increase that to 220,000 tons in 2025.

Posco Chemical shares jumped 16.8 percent to 135,500 won Thursday.

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