The South Korean steelmaker is looking to secure long-term supply of lithium, a key element in the batteries used in electric cars.
POSCO is looking to secure long-term supply of lithium, a key element in electric car batteries, as it aims to make about 30,000 tonnes of lithium products per year beginning in 2020.
The steelmaker is seeking to supply South Korean battery makers, including POSCO ES Materials and its joint venture with China’s Huayou Cobalt (SHA:603799), one of China’s top cobalt producers. Other major battery makers include LG Chem (KRX:051910), Samsung SDI (KRX:006400) and SK Innovation (KRX:096770).
Under the deal, the South Korean firm will also acquire a 4.75-percent stake in Pilbara Minerals, which owns the lithium-tantalum Pilgangoora mine in Western Australia.
The Australian miner plans to begin production of about 300,000 tonnes of lithium concentrate in the second half of this year, eventually reaching as much as 800,000 tonnes annually, POSCO said.
Pilbara also plans to take a 30-percent stake in POSCO’s planned future lithium factory. The location and timetable for the opening are yet to be confirmed.
As the race to secure raw materials for the electric car boom heats up, Pilbara continues to attract interest from battery and carmakers in the Asian market.
Last year, the company signed an offtake agreement with Chinese car manufacturer Great Wall Motors (HKEX:2333). It was the first investment deal by an automaker into an upstream supplier of lithium raw materials.
Pilbara is on track to start plant commissioning in Q2 2018 and to deliver its first spodumene concentrate by late Q2 2018, the company said.
On Tuesday (February 27), shares of Pilbara Minerals closed down 1.42 percent in Sydney at AU$0.83.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article