EXCLUSIVE: QPM’s nickel supply to LG Energy, Posco delayed to 2026

Industry

Published: 08 Mar. 2024, 06:30 Updated: 28 Apr. 2024, 17:04

EXCLUSIVE: QPM’s nickel supply to LG Energy, Posco delayed to 2026

Queensland Pacific Metals (QPM) CEO Stephan Grocott takes a photo during an exclusive interview with the Korea JoongAng Daily on the sidelines of InterBattery 2024 at Coex, southern Seoul, on Wednesday. [SARAH CHEA]

Queensland Pacific Metals (QPM), an Australia-based battery materials producer, will start supplying nickel and cobalt to LG Energy Solution and Posco Holdings as early as the end of 2026, a nearly three-year delay from the initial schedule.

The delay comes as EV sales remain in a global slump amid slowing consumer demand.

“There is no point in going fast,” QPM CEO Stephan Grocott said during an exclusive interview with the Korea JoongAng Daily on the sidelines of the InterBattery 2024 exhibition at Coex in southern Seoul on Wednesday.

“I came here to have meetings with LG and Posco to share progress reports on our nickel project, including the delay part,” Grocott added.

The site for QPM's Townsville Energy Chemicals Hub project establishing a battery materials refinery plant in Townsville that extracts nickel, cobalt and other valuable metals from laterite ore sourced from New Caledonia. [QPM]

The ASX-listed company is behind the proposed Townsville Energy Chemicals Hub (TECH) project establishing a battery materials refinery plant in Townsville that extracts nickel, cobalt and other valuable metals from laterite ore sourced from New Caledonia.

In 2021, LG Energy Solution inked an offtake agreement with QPM to source 7,000 tons of nickel and 700 tons of cobalt every year for 10 years starting toward the end of 2023. Posco invested $4.5 million in the Australian company for 3,000 tons of nickel sulfate and 300 tons of cobalt sulfate.

Nickel and cobalt are the two main ingredients in EV battery production. Discovering a new supply source other than China has been the biggest task for battery makers since the enactment of the U.S. government’s Inflation Reduction Act (IRA), which requires automakers to source minerals from countries with which Washington has free trade agreements in order to qualify for a subsidy of up to $7,500.

The following are edited excerpts from the interview with Grocott.

Ultium Cells employees work at its battery manufacturing plant in Lordstown, Ohio. Ultium Cells is a 50:50 joint battery venture between LG Energy Solution and General Motors. [LG ENERGY SOLUTION]

Q. Can you give us more details on QPM’s deal with LG Energy Solution and Posco Holdings?

A. When we were in the very early stages, we started discussions with several Korean companies. LG was very keen to invest but they didn’t have enough technical understanding of industrial chemistry, so they brought Posco into the deal as Posco has considerable expertise in the industry.

LG Energy and Posco are independent companies but they are cooperating. They invested about 20 million Australian dollars in total — LG invested $10.5 million to have 5.7 percent while Posco poured $4.5 million in for 2.4 percent. They also signed an offtake deal, and it lasts for seven years with a possible three-year extension.

The main reason for my visit to Korea is to have a meeting with LG and Posco to share the progress report of our TECH project. We have regular meetings once every two or three months, though they can’t be offline meetings all the time.

How come the sizes of their shares are different from the initial announcement?

Initially, LG Energy had about 7 percent while Posco had 3 percent, but the sizes have reduced because they didn’t participate when we issued new shares.

LG Energy is QPM’s second-largest investor while Posco is third, after No. 1 General Motors.

A bird's-eye view of Posco Future M's cathode plant in Gwangyang, South Jeolla. [POSCO FUTURE M]

When does the supply start?

We could say 2026. We’re currently undergoing a feasibility study, which will be finished in four to eight months. Then the construction of the plant will take two years, and we could start production as early as the end of 2026.

We’re not stopping, we’re just slowing down. There is no point in going fast at the moment.

There were reports that Samsung SDI also signed a 5-year deal with QPM.

No. Samsung SDI was one of the 17 companies we talked to but we chose LG Energy Solution and Posco because those were much bigger deals.

Are you considering any other Korean battery makers, such as SK On, as clients?

No, we have no offtake available at the moment. It is all taken. Companies like LG Energy Solution and Posco approached us even before the IRA. They were very clever.

Our materials and technology are extremely clean compared to plants in China and India. In my personal view, any EV battery manufacturers that use a supply chain from those countries will be heavily penalized and face problems. Not today, but it’s coming.

Look at the ESG future. There are companies all around the world, not just in Korea but in Japan, Europe, the United States, and Canada — they are all going in one direction. If you don’t have clean production in the battery supply chain, you are going to be in trouble.

The lithium iron phosphate (LFP) battery market is growing amid the intensifying price war. What do you think about that trend?

LFP batteries have a very small battery output and a short range. They could be acceptable for cars for short commutes, but performance-based vehicles in all countries are for people who are concerned about range. High nickel means a long range and high energy density.

Even Tesla only uses LFP batteries for the entry-level Model 3 but high-nickel batteries for longer-ranged models.

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