Jeonnam Province, the Heart of Advanced Industry, Signs Large-Scale Investment Agreement for Secondary Battery Materials Lithium

POSCO Lithium Solution invests over 760 billion KRW... Large-scale foreign investment expected through joint venture with overseas mining company

[Asia Economy Honam Reporting Headquarters, Reporter Heo Seonsik] Jeonnam Province has signed a large-scale investment agreement, including $100 million in foreign investment attraction, with POSCO Lithium Solution Co., Ltd., a company producing lithium hydroxide, a cathode material for secondary batteries.

On the 6th, the province announced that it signed a 760 billion KRW investment agreement (MOU) at the provincial office, attended by Governor Kim Young-rok, Gwangyang Deputy Mayor Kim Kyung-ho, Yu Hyun-ho, Head of Investment Attraction at Gwangyang Bay Area Free Economic Zone Authority, and Jung Chang-hwa, Vice President and Head of POSCO’s New Growth Division.

POSCO Lithium Solution is a joint venture (JV) to be established by POSCO, which is aiming to become a century-old company through future new business transformation, and an overseas mining company that owns lithium mines, the key raw material for secondary batteries.

Once the overseas mining company’s equity investment (30%) is confirmed, it is expected to result in $100 million in foreign investment attraction for Jeonnam Province.

Through this agreement, POSCO Lithium Solution Co., Ltd. plans to invest 760 billion KRW by 2023 to build a lithium hydroxide production plant in the Yulchon Industrial Complex in Gwangyang and hire 260 new employees. Once the plant is completed, it will produce 43,000 tons of lithium hydroxide annually, enough to manufacture 1 million electric vehicles.

The lithium market has continued to grow centered on secondary batteries. Due to the recent surge in lithium demand for electric vehicles, the industry forecasts that global lithium demand for electric vehicles will grow from 121,000 tons in 2020 to 1,435,000 tons in 2030, with an average annual growth rate of 28%.

Cathode materials, the core components of secondary batteries, consist of rare metals such as lithium, nickel, cobalt, and manganese. Due to the increase in electric vehicle demand, prices of these minerals have surged this year.

The domestic battery industry is fiercely competing to secure raw materials to ensure stable supply.

According to last year’s report by the Federation of Korean Industries, Korea’s self-sufficiency rate for lithium and cobalt is nearly 0%, relying mostly on imports from China for battery raw materials.

This joint venture between POSCO and the overseas lithium mining company enables stable lithium raw material procurement, allowing annual supply of lithium sufficient for producing 1 million electric vehicles domestically starting in 2023. This is expected to have an import substitution effect worth 370 billion KRW annually, after deducting 210 billion KRW in ore import costs from 580 billion KRW in lithium sales.

POSCO is also on the verge of establishing a 120 billion KRW joint venture with a Chinese company possessing extraction technology for valuable metals such as cobalt, lithium, and manganese, aiming to complete the secondary battery material value chain by securing raw materials like lithium, nickel, and graphite.

Jung Chang-hwa, Head of POSCO’s New Growth Division, said, “This investment secures the stability of lithium raw material supply and, through POSCO’s advanced technology, enables us to supply high-quality domestic products to lithium demand companies in Korea, which currently rely 100% on imports, thereby enhancing business competitiveness.”

Jeonnam Governor Kim Young-rok stated, “POSCO Lithium Solution, which signed the investment agreement today, is an essential company to secure competitiveness in the secondary battery material sector, which is becoming a key future industry for our province. The province, Gwangyang Free Economic Zone Authority, and Gwangyang City will actively support creating a virtuous cycle structure where the region and companies can coexist and develop.”

Meanwhile, since the 7th local government administration, Jeonnam Province has contributed to revitalizing the regional economy by attracting investments worth 2.3752 trillion KRW from 763 companies as of the end of last month, laying the foundation for creating over 24,000 jobs.

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