POSCO Holdings, Emphasizes Investment in Eco-Friendly Materials Business Despite Steel Industry Contraction (Comprehensive)

POSCO Holdings stated that despite the contraction of its steel business due to weak demand, it will not slow down its investment pace in eco-friendly future materials businesses such as secondary battery materials.

Jung Ki-seop, Chief Strategy Officer (CSO) of POSCO Holdings, said at the 2023 earnings presentation on the 31st, "The group’s growth strategy is being carried out based on long-term orders with a long-term perspective," adding, "It is not easy to reverse, change direction, or abandon investments that have been executed since the new CEO was appointed."

'With Posco' sculpture at the POSCO building in Yeoksam-dong, Gangnam-gu, Seoul. Photo by Younghan Heo younghan@

He continued, "Please understand that the new growth strategy was adopted through discussions between management and the board of directors under the strategy of maximizing shareholder value," and added, "The nomination committee is also expected to appoint a CEO who can effectively promote the growth strategy, and even after the new CEO is appointed, a positive relationship between management and investors will be maintained."

POSCO Holdings is accelerating efforts to secure production capacity for secondary battery materials such as lithium and nickel. POSCO Philbar Lithium Solution completed the first plant with an annual production capacity of 21,500 tons of lithium hydroxide last year, and the comprehensive completion of the second plant is scheduled for the second quarter. This will establish a production system capable of supplying lithium hydroxide for 1 million electric vehicles, with a capacity of 4,300 tons.

The lithium brine plant in Argentina is also scheduled for the first phase completion in the second quarter, with a production capacity of 25,000 tons, and the second phase of the same scale will begin construction in the second half of the year.

Regarding nickel, the nickel smelting joint venture in Indonesia broke ground in September last year and is scheduled for completion in the second quarter of next year. The joint venture for nickel refining and precursor materials in China is expected to be completed in the fourth quarter of next year.

The company explained that despite concerns over the sharply falling lithium prices, POSCO Philbar Lithium Solution is expected to record double-digit operating profits this year.

POSCO Holdings said, "The POSCO Philbar Lithium Solution plant was completed at the end of last year, and raw materials are currently being input to normalize operations," adding, "After a one-year ramp-up period, we aim to achieve an 80% operating rate by the end of this year by combining the first and second plants."

It continued, "Sales negotiations with customers have also been finalized, with most long-term contracts completed and only contract signing remaining," adding, "Although lithium prices have recently dropped significantly, double-digit operating profits can still be achieved at this price level."

It also stated, "We believe current lithium prices are approaching the bottom," and "The lithium production cost of POSCO Philbar Lithium Solution is not high compared to local Chinese companies, ensuring sufficient competitiveness."

In the steel sector, meaningful performance improvement is expected to be difficult until the first quarter of this year. Ban Don-ho, head of POSCO’s Marketing Strategy Office, said, "Compared to the second quarter, iron ore prices rose by 27% and coal by 51%, but due to market conditions, the increase in raw material prices could not be reflected in prices, causing a significant deterioration in fourth-quarter profits."

He added, "Efforts are underway to reflect the impact of raw material price increases in prices, and we will prioritize securing profitability through expanding sales of high-margin strategic products such as future portfolio transitions and structural cost reductions," explaining, "We expect to report improved performance from the second quarter and have set higher overall targets than last year."

Regarding the recent controversy over imported steel, he said, "Imported flat steel products surged by more than 20% in the domestic market last year," adding, "We are keeping all options open at this stage to protect the crude steel industry."

He also said, "The intention is to prevent unfairness caused by low-priced imports distorting domestic prices," adding, "Compared to other countries, Korea does not have high import barriers, and the manufacturing base using imported steel in shipbuilding, automobiles, and other sectors is solid."

POSCO Holdings recorded an operating profit of 3.531 trillion KRW on a consolidated basis last year, a 27.2% decrease from the previous year. Sales fell 9% to 77.127 trillion KRW, and net profit dropped 48.2% to 1.846 trillion KRW.

Meanwhile, POSCO Holdings confirmed an annual total dividend of 10,000 KRW per share last year and set the record date for the year-end dividend of 2,500 KRW as February 29.

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