Huayou Cobalt is one of the world’s biggest mining companies that can produce about 50 percent of the cobalt required for manufacturing lithium-ion batteries worldwide. They also have their own nickel mine in addition to a cobalt mine.

The joint venture for precursor production is made up of 60 percent of investments by Huayou Cobalt that can supply cobalt, nickel and manganese, and 40 percent by POSCO. 60 percent of investments for the joint venture for cathode material production comes from POSCO who owns the high-grade cathode material production technology and 40 percent of investments come from Huayou Cobalt. The joint ventures will be operating production lines for 4,600 tons of precursors and cathode materials a year starting from the second half of 2020.

POSCO and Huayou Cobalt sign agreements for joint ventures in cathode material supply and production.

Through these joint ventures, POSCO can now secure its market position in China by directly manufacturing and selling cathode materials locally. In addition, it can gain a competitive edge by securing a stable supply of not only precursors but also materials such as cobalt, nickel and manganese for POSCO ESM’s cathode materials plant in Gumi. Huayou Cobalt can expand its business in manufacturing and sales of cathode materials in addition to that of raw materials.

As the eco-friendly policies of the world continue to be tightened, the demand for electric vehicles, industrial energy storage systems (ESS) and IT bulk batteries has increased rapidly. Thus, the market for cathode materials, which are essential materials for lithium-ion batteries, is also expected to quadruple from 210,000 tons in 2016 to 860,000 tons in 2020.

Accordingly, the price of cobalt, one of the most expensive materials, tripled in the last two years, followed by the price of nickel and manganese. This explains why a stable supply of materials is essential for profitability.

POSCO’s lithium-ion battery material business is headed for future growth, and is expected to gain increased momentum with the joint ventures for precursors and cathode materials. POSCO completed its carbon lithium plant PosLX at Gwangyang Steelworks last year after 7 years of developing its own proprietary technology of directly extracting lithium in 2010. It is currently under commercial production.

From left to right: Jae-chun Song, chairman of Gwangyang City Council, Hyun-bok Jeong, mayor of Gwangyang, Gi-jong Woo, deputy governor of South Jeolla Province, POSCO CEO Ohjoon Kwon, Ung-beom Lee, president of LG Chem and Nam-seong Cho, president of Samsung SDI who can be seen pressing symbolic buzzers to show that the plant is now online.

“Our vision is what propelled us to keep going in spite of many difficulties and limitations,” POSCO CEO Ohjoon Kwon said. “We plan to continue differentiating ourselves in the energy material business with lithium, high purity nickel, and positive electrode materials.”

Jong-joo Kim, a director at the Ministry of Trade, Industry and Energy said, “Today’s completion of the plant gives POSCO the ability to provide lithium carbonate for its partners in the battery manufacturing industry. ”

POSCO is currently obtaining its lithium phosphate, a raw material of lithium carbonate, by extracting it from wasted rechargeable batteries. In the future, POSCO will use its proprietary lithium extraction technology to produce its own lithium phosphate. POSCO has been developing this eco-friendly technology for 7 years. It extracts lithium phosphate from saline water and converts it into lithium carbonate. Unlike the conventional method that takes 12 to 18 months on average, POSCO’s highly efficient method takes as little as 8 hours or up to one month. This method offers a purity rate of 99.9% while also increasing the lithium recovery rate to over 80%.

POSCO CEO Ohjoon Kwon and others being briefed on the lithium production process while taking a tour of the PosLX Plant.

Due to the continuous expansion of the mobile industry, the demand for lithium-ion secondary batteries has increased exponentially. In 2015, worldwide demand for lithium carbonate for batteries swelled from 6,000 tons (in 2002) to 66,000 tons. And as the presence of electric vehicles and energy storage systems (ESS) continues to expand, the demand for lithium carbonate is expected to balloon over 180,000 tons by 2025. To address these changing needs, POSCO plans to strengthen its position as a global lithium production base by building plants that have an annual production capacities of 40,000 tons of lithium – both at home and abroad – starting with the PosLX Plant at Gwangyang Works.

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