November 27, 2024

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Posco Future M's aerial view of cathode materials plant in Pohang, North Gyeongsang Province (Posco Future M)

South Korean battery materials maker Posco Future M said Wednesday it has inked a deal worth 30.25 trillion won ($22.6 billion) to supply high-nickel cathode to LG Energy Solution, the nation’s largest electric vehicle battery maker, for the next seven years.

The mega deal comes after the company secured a 10-year supply deal worth 40 trillion won with Samsung SDI, another major battery maker here, in January.

Cathode, making up more than 40 percent of battery prices, is a key battery material that defines EV performance overall. A high-nickel cathode, with a nickel content of more than 80 percent, helps boost energy capacity, while other cathode components such as cobalt, manganese and aluminum enhance safety and power output.

“Our business expansion has been possible largely thanks to our close ties with LG Energy Solution dating back to the early days of our battery materials business. We will continue efforts to strengthen our global competitiveness,” said Posco Future M President Kim Jun-hyung.

Posco Future M and LG Energy Solution have maintained close ties since 2012, having teamed up for product development. They signed their first large-scale supply deal worth 1.8 trillion won in 2020. In 2022, Posco Future M secured 22 trillion won of cathode orders from Ultium Cells, a joint venture between LG Energy Solution and General Motors.

Posco Future M has thus far secured an accumulated 92 trillion won in cathode orders.

Based on its success at home, the company said it aims to expand its presence in other key EV markets such as the US, China and Europe. With the business expansion, the production capacity of cathode materials is expected to surge from the current 105,000 metric tons to 610,000 tons by 2030, while the capacity for anode materials is also expected to increase from 82,000 tons to 320,000 tons in the next seven years.

In close partnership with Posco Group, LG Energy Solution has also secured a stable supply chain of key materials to further strengthen its competitiveness in global markets. They plan to bolster ties in diverse areas including recycling and precursor production.

By Byun Hye-jin (hyejin2@heraldcorp.com)