Posco Future M has reached an agreement to purchase lithium hydroxide from Posco Pilbara Lithium Solution, a company within its corporate group. This agreement aims to circumvent issues related to the US Foreign Entity of Concern (FEOC) restrictions by sourcing 20,000 metric tons of lithium hydroxide, sufficient to produce cathode materials for about 460,000 electric vehicles. Cathode materials are crucial for the manufacturing of lithium-ion batteries, which are predominantly used in EVs.
The lithium hydroxide will be sourced from Australian mines and processed at the Gwangyang plant in South Korea, a facility jointly owned by Posco Holdings and Australia's Pilbara Minerals. This plant has recently increased its production capacity to 43,000 metric tons per year. This strategic move allows Posco Future M to avoid reliance on raw materials from FEOC-listed countries, which could impact its eligibility for US tax credits under the Inflation Reduction Act starting in 2025.
To serve the growing demand for EVs in the US, Posco Future M plans to progressively increase its purchases of lithium hydroxide from Posco Pilbara Lithium Solution. Moreover, the company is strengthening its internal supply chain by leveraging lithium sourced from Argentina, nickel from its SNNC unit (a joint venture between Posco and SMSP), and recycled materials through Posco HY Clean Metal. This approach not only ensures a steady supply of key battery components but also aligns with US trade regulations, enabling Posco Future M to maintain its competitiveness in the EV market.
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