POSCO Future M has signed a preliminary agreement with Chinese battery material company Huayou Cobalt to build a battery-grade nickel sulfate refining and precursor plant in Pohang, South Korea, to serve increasing demand from the electric vehicle (EV) sector.
The two companies along with the Pohang city and the local government of North Gyeongsang province, signed the memorandum of understanding (MOU) for the project on May 3, Shanghai-listed Huayou said. The joint venture project is expected to go into commercial operations in 2027, according to domestic media in South Korea.
A ternary precursor typically contains nickel, cobalt and manganese or aluminium, which would be turned into cathodes, a key battery material that determines the power and range of EV batteries. Almost half of the EV production cost comes from cathode materials.
POSCO’s move comes amid rising global demand for EVs, which still largely prefers high-nickel cathode material to power batteries. In March, the leading battery material producer said it would build a plant to produce cathode material from nickel, cobalt and aluminium (NCA) in Pohang.
Fastmarkets Research expects nickel-cobalt chemistries, which include NCA, high-nickel nickel-cobalt-manganese (NCM) and high-manganese NCM, to make up around 62% of the market share by 2029, down roughly 8% from 2023, while lithium-iron-phosphate (LFP) to have around 35% of the market share by 2029, up 6% from 2023.
Nickel sulfate is a key component in nickel-cobalt-manganese (NCM) units, and nickel-rich batteries are often preferred over LFP batteries due to their high energy density and longer range when used in EVs.
Liquidity in the international sulfate market remains thin, with much of the material in the region tied up in long-term contract negotiations. Fastmarkets most recently assessed the nickel sulfate premium, cif China, Japan and Korea at $1,000 per tonne on Friday May 5.
POSCO Future M produces nickel-rich ternary cathode materials. In line with the growth in the global EV market, the company said they plan to expand annual production capacity of cathodes to 610,000 tonnes by 2030.
Additionally, market sources believe that Huayou’s business ties with South Korean companies could help it to bypass the tightening US regulations aimed at weaning demand off China’s supply chains.
In August 2022, US president Joe Biden introduced the Inflation Reduction Act (IRA) to offer tax credit for EV purchases, where at least 80% of the lithium, cobalt, nickel and manganese used in their construction has been extracted and processed in the US — or in a country with which it has a free-trade agreement.
The goal is to encourage mining and manufacturing in the US while moving key minerals’ supply away from non-free trade partners, including China.
Early in April, the counterpart Huayou has also expended ties with LG Chem to produce cathodes and precursors in South Korea.
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