POSCO Investment makes its first overseas CVC investment in the low-carbon steel sector

On April 28, POSCO announced the signing of a joint development agreement with Electra of the United States to develop low-carbon ironmaking technology.

Founded in Colorado in 2020, Electra possesses proprietary technology that produces solid iron by removing impurities from iron ore through electrochemical reactions. The company is currently constructing a pilot plant with an annual capacity of 500 tons, aiming for operation within this year.

Through this agreement, the two companies plan to combine POSCO’s direct reduction technology with Electra’s low-carbon ironmaking system to jointly verify technical and economic feasibility for commercial production.

“POSCO brings deep experience in steelmaking, production technology and process development,” said Sandeep Nijhawan, Electra’s co‑founder and chief executive officer. “We’re building for the long term, and this partnership helps us scale thoughtfully as we bring clean iron to more customers.”

Eom Kyeong-geun, Head of POSCO Technical Research Laboratories, explained, “This partnership through the joint development agreement aims for strategic synergy between POSCO’s proprietary direct reduction and engineering technologies and Electra’s innovative electrochemical process.”

On the same day, POSCO Investment also announced a CVC investment agreement with Electra.

Kim Keun-hwan, President of POSCO Investment, stated, “This investment marks our first overseas strategic CVC investment in the decarbonized steel sector. It holds special significance as a climate-tech investment in preparation for the era of decarbonization.”

▲ POSCO and POSCO Investment sign a joint development and investment agreement with Electra to collaborate on technical validation for commercial production. (From left) Eom Kyeong-geun, Head of POSCO Technical Research Laboratories; Sandeep Nijhawan, CEO of Electra; and Kim Keun-hwan, President of POSCO Investment.

Selected a specialist in rare earth separation and refining as its first investment target, committing KRW 8 billion

Secured raw material sources in Southeast Asia, including Malaysia and Laos for a production foundation with an annual capacity of 4,500 tons

Plans to establish a joint plant with U.S.-based ReElement to complete a North American production system for rare earths/permanent magnets/traction motor cores by 2028

POSCO INTERNATIONAL is accelerating the development of a global supply chain for heavy rare earth elements, essential materials for electric vehicle (EV) traction motors.

Partnering with POSCO INVESTMENT, the company has launched its inaugural KRW 25 billion CVC fund, and the fund’s first strategic move involves an KRW 8 billion investment in a domestic specialist in rare earth separation and refining.

This fund is more than a financial vehicle as it will serve as a strategic investment platform for technological synergy and new business expansion. The fund will be managed by POSCO INVESTMENT, a venture investment specialist within the POSCO Group, and both companies plan to continuously identify promising technology companies that align with future growth strategies.

At its heart, this investment is about securing a stable supply of heavy rare earths. Elements such as dysprosium (Dy) and terbium (Tb) are essential for high-performance magnets in EV traction motors, as they allow them to stay magnetic even under intense heat. However, because production and refining are concentrated in a few countries, these materials pose a significant structural risk to the global supply chain.

The target company of this investment is a domestic specialist in rare earth separation and refining that possesses integrated process capabilities ranging from separation and refining to metallization. The company holds proprietary technology to produce heavy rare earth oxides at 99.5% purity and further reduce them into metals at 99.9% purity. Through this investment, the company intends to secure a stable supply source within the supply chain of heavy rare earths and build a stronger foundation for future business growth.

Alongside this domestic investment, the company is also making Southeast Asia as a base to strengthen its global system for raw material procurement. It plans to establish a USD 30 million joint venture with a specialized Malaysian company for separation and refining, validate an environmentally friendly mining and stable production system, and then proceed to full-scale mass production. In addition, the company is participating in a rare earth separation and refining project in Laos to expand its raw material procurement network across Southeast Asia.

These regional efforts are expected to secure an annual supply of roughly 4,500 tons of rare earth separation and refining products (approximately USD 230 million at today’s market prices) that can be secured from Southeast Asia. POSCO INTERNATIONAL intends to make additional investments in the future to expand production capacity to more than 10,000 tons.

The company is also accelerating its entry into the North American market, leveraging raw materials secured in Southeast Asia. In partnership with the U.S.-based company ReElement, it is establishing a joint rare earth separation and refining plant with an annual capacity of 3,000 tons, with full-scale production scheduled to begin in the second half of 2027. Furthermore, it plans to secure an annual production capacity of 3,000 tons for permanent magnets by 2028.

Through this series of investments, it aims to complete the full rare earth value chain—from mining to separation and refining to permanent magnet production—and integrate it with the manufacturing of traction motor core to continuously strengthen the competitiveness of its core EV parts business.

“This investment is a strategic move to simultaneously diversify our core mineral supply chain and sharpen our competitiveness in the mobility materials business,” a POSCO INTERNATIONAL official stated. “Moving forward, we will continue to leverage our CVC fund to identify promising companies with strong business synergy and secure new growth drivers for the future.”

Meanwhile, POSCO Group Chairman Chang In-hwa has consistently emphasized the importance of timely investments in core minerals to stabilize the global supply chain and capture future growth opportunities in the secondary battery materials market. Last year, POSCO HOLDINGS invested a total of KRW 1.1 trillion to expand its footprint in the lithium sector, securing additional stakes in Australian mines and Argentine brine projects. This year, commercial lithium production in Argentina has begun, and the Australian lithium mine is expected to start contributing to profits in the second half of the year, following the completion of the stake acquisition.

▲ Panoramic view of POSCO International headquarters.