[Q&A] "Continuing Investment Despite Challenges... Decoupling Natural Graphite from China"… Kim Junhyung, CEO of POSCO Future M

Attended Groundbreaking Ceremony of Gwangyang NCA Cathode Material Plant
"Crossing the Chasm, Now is the Right Time to Invest"
"Considering Natural Graphite Investment in Africa and Others"

Kim Jun-hyung, CEO of POSCO Future M, is attending the groundbreaking ceremony of the Gwangyang NCA cathode material plant on the 22nd and answering reporters' questions. Photo by Kang Hee-jong

Amid the slowdown in the global secondary battery market growth, POSCO Future M has once again confirmed that it will continue with its planned investments. Regarding natural graphite, which is currently entirely imported from China, the company announced plans to diversify its supply sources to Madagascar, Africa, and other regions.

Kim Jun-hyung, CEO of POSCO Future M, made these remarks during a groundbreaking ceremony for the NCA cathode material factory held on the 22nd in Gwangyang, Jeollanam-do, speaking with reporters.

CEO Kim stated, “All ongoing investments are based on contracts that guarantee a certain margin,” adding, “Even if the market is difficult, investments will continue.” He elaborated, “The current investments are for volumes that will enter full-scale mass production in 2 to 3 years,” and emphasized, “Now, as the secondary battery market is crossing the chasm, it is the right time for investment.” He stressed that investments will continue not only domestically but also overseas.

Regarding graphite, CEO Kim said, “We currently import 100% of raw materials from China, process them at the Sejong factory, and supply domestic companies, but this is not exempt from the U.S. Inflation Reduction Act (IRA),” calling it “the most concerning part.” He added, “If we import natural flake graphite from Madagascar and Africa and process it, it qualifies under the IRA,” and stated, “We are reviewing investments and expect visible results soon.”

CEO Kim was appointed as the head of POSCO Holdings’ Eco-friendly Future Materials Division in a personnel announcement the day before. This will be finalized after passing the regular shareholders’ meeting next month. Regarding this, Kim said, “I will oversee investments in new growth engines within the group, such as secondary batteries and hydrogen, and support POSCO Future M,” adding, “Since I swapped positions with the new President Yoo Byung-ok to promote secondary batteries, I believe the current investment policy will be maintained.”

Below is a Q&A session with CEO Kim Jun-hyung.

- Has there been any change in investment goals?

▲ The goals set when the company name was changed last March have not been revised so far. Since it is uncertain how long the current chasm phenomenon will last, there may be slight changes under the new chairman’s system, but there will be no changes within the volumes already contracted.

- Any changes in sales targets?

▲ There is no change in the 2030 production target of 1 million tons of cathode materials. Sales targets may vary depending on nickel prices at the time the production targets were set. Recently, nickel and lithium prices have rebounded, so we expect no significant long-term changes in sales targets.

- What is the role of the newly appointed head of the Eco-friendly Future Materials Division?

▲ This position oversees investments in future materials, secondary batteries, hydrogen, and other new growth engines within the POSCO Group. It also manages nickel and lithium. The role includes supporting POSCO Future M. Since I swapped positions with President Yoo Byung-ok to promote secondary batteries, I believe investments will continue under the current policy.

- How is the yield of single-crystal NCA cathode materials?

▲ Single-crystal particles are hard, so even when pressure is applied during coating on aluminum foil, they do not break and have durability. The product is qualitatively completely different from existing ones, so there were difficulties in application. However, yield and quality levels have normalized since this year. This model is currently operating normally at the Pohang cathode material factory.

- Is graphite production proceeding smoothly?

▲ Graphite is currently the most concerning part in batteries. We import 100% natural graphite from China, process it at the Sejong anode material factory, and supply domestic companies, but it is not exempt from the Inflation Reduction Act (IRA). The solution is to import natural flake graphite from places other than China and process it. We are reviewing investments in Madagascar, Africa, and other regions, and expect visible results soon. Artificial graphite production began in earnest this month and shipments will start in March. The second-phase factory will be completed in August. Additional investments are also under consideration.

- With the new chairman appointed, what is the policy on the secondary battery business?

▲ Since the new Chairman Jang In-hwa has not officially taken office yet, no formal guidelines on secondary batteries have been set. The POSCO Group’s direction is twofold: first, to strengthen competitiveness in steel, and second, to actively invest in the group’s eight strategic industries, including secondary batteries and hydrogen, to foster future growth. I believe there will be no disagreement on this.

- What are the expected results for this year?

▲ The cathode material segment recorded losses last year. We expect much better results this year. We have met with customers who cautiously anticipate an economic recovery in the second half. Demand for single-crystal and other customer-requested volumes is increasing, so we will enter a full production system.

- Is there a possibility of adjusting equity stakes with Chinese companies regarding the Foreign Entity of Concern (FEOC) under the IRA?

▲ The FEOC criterion is whether Chinese ownership exceeds 25%. We expect to adjust equity stakes based on this 25% threshold. The U.S. State Department has not provided clear answers. We are moving toward contracts with the condition that terms may change with the Chinese side. Chinese joint venture partners have not made major changes yet. There is a verbal agreement that equity stakes can be adjusted if necessary.

- What are the plans for LFP production?

▲ There remain doubts about the direction of LFP. From the cathode material perspective, margins are not large. It is not competitive in recycling either. Competing with China by investing in domestic facilities is not easy. The most competitive model seems to be a joint venture with a technology-holding company overseas, rather than domestic production, as an alternative to avoid the IRA.

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