November 28, 2024

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Posco Group Chairman Choi Jeong-woo (Posco Holdings)

Posco Group Chairman Choi Jeong-woo and former US Deputy Secretary of State Stephen Biegun met on Wednesday in Seoul to discuss global supply chain strategies.

Biegun currently works as an adviser for Posco America since his appointment in 2021.

“(Choi and Biegun) are expected to discuss Posco Group’s global strategies for the future and measures to overcome the ongoing global supply chain crisis,” an official from Posco Holdings said.

Their meeting on Wednesday drew attention as they were expected to discuss Posco Group's lithium supply strategy in line with the recently updated details of the US Inflation Reduction Act.

Posco Group has been expanding its business in lithium supply, key materials for battery products.

In line with the recently disclosed details of the Inflation Reduction Act guidance, Posco Group has also emerged as one of several South Korean companies that will benefit from the IRA guidance.

According to the Notice of Proposed Rule-Making guidance issued not too long ago, battery materials processed in South Korea are eligible for tax credits even if the processed minerals are sourced from countries that have not signed free trade agreements with the US.

Posco Group currently expects the group can benefit from the updated guidance of the IRA as the group will process lithium in South Korea and source them from Australia. Both countries had signed the FTA with the US, making them eligible for tax credits.

In Australia, Posco Group, previously secured access to 315,000 tons of lithium ore annually, which can produce 40,000 tons of lithium, enough for 960,000 electric vehicles.

Posco Group is currently building an ore lithium plant in Gwangyang, South Jeolla Province, which can produce 43,000 tons of lithium per year and expects to complete the construction during this year.

Posco Group’s lithium production will increase more as it begins to operate its lithium hydroxide plants in the future, which will be sourced from Argentina where the group has access to a lithium brine of 13.5 million metric tons.

The group expects to complete construction of a lithium hydroxide plant in Argentina next year, which will have an annual lithium production capacity of 50,000 tons in the future.

“The lithium products sourced from Argentina, however, are not eligible for tax credits under the IRA guidance, although there are possibilities that Argentina could be included in the US list of countries that are eligible for tax credits in the future,” the official from Posco Holdings said.

Posco Group is considering building an additional lithium hydroxide plant in South Korea, but the exact location has not been decided.

By Shim Woo-hyun (ws@heraldcorp.com)