Choi Jung-woo's 'Magic', Battery Material Business... POSCO Chemical Gaining Attention in the Electric Vehicle Industry

Choi Jung-woo, Chairman of POSCO

[Asia Economy Reporter Hwang Yoon-joo] Posco Chemical is expected to become a cash cow for the Posco Group starting from the third quarter, alongside improved performance driven by the growth of the three major domestic battery companies. Chairman Choi Jung-woo's strategy of aggressively investing in the energy business and the 'mobility materials' business as new growth engines for the group amid a downturn in the core steel market appears to be bearing fruit following the COVID-19 pandemic.

According to industry sources on the 16th, Posco Chemical will invest 289.5 billion KRW to begin producing next-generation cathode materials (NCMA) starting this September. Through this, the company plans to expand its annual cathode material production capacity to 70,000 tons by 2022. This capacity is sufficient for approximately 840,000 electric vehicle batteries of 60kWh class.

For anode materials as well, the company has started expanding its second plant since Chairman Choi took office. The goal is to reach an annual production of 76,000 tons of anode materials by 2022, which corresponds to supply for about 1.26 million high-performance electric vehicles equipped with 60kWh class batteries.

This investment is expected to further strengthen the 'battery value chain' with LG Chem, the global number one battery company. The newly installed cathode material line will produce NCMA cathode materials, which the industry anticipates will be a catalyst for the popularization of electric vehicles by satisfying both output and stability. It is reported that Posco Chemical's NCMA cathode materials will be incorporated into battery products supplied by LG Chem starting in 2022. Market experts particularly expect that as LG Chem's Polish plant improves its yield, Posco Chemical's sales will significantly increase in the second half of the year, leading to a shift in its portfolio.

According to securities information provider FnGuide, Posco Chemical's third-quarter sales are estimated at 450 billion KRW, a 21.7% increase compared to the same period last year, while operating profit is expected to decrease by 7.4% to 25.9 billion KRW.

Although second-quarter results fell short of expectations, the secondary battery (electric vehicle battery) materials segment stands out. Sales in the battery materials business reached 94.6 billion KRW, up 51.7% year-on-year and 8.7% compared to the first quarter of this year. Notably, the sales proportion jumped from 17.4% last year to 27.8% this year, indicating a transformation into a 'mobility materials' company.

Regarding Posco Chemical's growth, both inside and outside the group, there is an assessment that Chairman Choi's strategy to nurture the mobility materials business as a new growth engine for the group has succeeded despite uncertain management conditions.

Posco Chemical is experiencing a favorable situation where its status within the group is rising as it expands cathode and anode materials production amid the rapid growth of the electric vehicle battery market.

An industry official said, "Posco is recognized as one of the top five conglomerates, including Posco International, Posco Engineering & Construction, Posco Energy, Posco Chemical, and Posco ICT. Recently, Posco Chemical has been receiving protocol comparable to the top three group companies," adding, "As global companies focus on growing their mobility businesses, Posco Chemical's importance is also increasing."

This content was produced with the assistance of AI translation services.