Posco’s headquarters in Gangnam, Seoul. (Yonhap)
POSCO, the world's fifth-largest steelmaker by output, said Thursday it has signed a deal to buy a 30 percent stake in the Ravensthorpe Nickel Operation in Australia for $240 million in the latest move to boost its electric vehicle battery business.
Under the deal with Canadian miner First Quantum Minerals Ltd., POSCO will be provided with a long-term offtake agreement for 7,500 tons of nickel in mixed nickel-cobalt hydroxide precipitate (MHP) per year produced at Ravensthorpe, beginning in 2024.
The amount is enough to manufacture about 180,000 electric vehicles per year.
First Quantum Minerals said it expected the deal to be closed sometime in the third quarter of 2021.
POSCO and First Quantum Minerals also entered into a memorandum of understanding to explore a partnership to produce battery cathode precursor materials, likely in the form of nickel sulphate, by utilizing the MHP from Ravensthorpe.
A cathode is one source of lithium in a lithium-ion battery and is also a key component of EV batteries.
South Korea's steel giant POSCO Group has been pushing to boost its EV business in recent years as part of a diversification strategy.
In February, POSCO Chemical Co., an affiliate of POSCO, announced its plan to invest 275.8 billion won ($248 million) to expand its production capacity of cathodes, a key component for EV batteries.
POSCO Chemical said the plant in South Korea's southern industrial city of Gwangyang will boost its annual production capacity of cathodes to 100,000 tons by 2023, which is enough to manufacture about 1.1 million electric vehicles equipped with 60 kilowatt-hour battery packs.
POSCO Chemical also said it plans to set up plants in China and Europe to timely supply cathodes to EV battery makers.
The EV battery market has been on a roll as automakers around the world race to go electric and eco-friendly due to tightened regulations on greenhouse gas emissions, which scientists say are to blame for global warming.
In December, POSCO agreed to buy a 15 percent stake in Black Rock Mining, an Australia-based graphite producer, for $7.5 million.
The deal will pave the way for POSCO to secure graphite fines, a material required to make anodes, according to the steelmaker.
An anode is a key material in a battery that preserves lithium coming from the cathode and generates electricity while releasing lithium. (Yonhap)