POSCO Future M plans to import African graphite to cut China reliance

2024-03-09

Mar. 9, 2024 - POSCO Future M, the only major battery material in Korea that produces cathode materials, has signed a contract with Syrah Resources Limited to receive a large amount of natural African graphite. It is interpreted that it is diversifying the graphite supply chain, which had been entirely dependent on China, to prepare for the U.S. Inflation Reduction Act (IRA).

The contract volume can be determined by POSCO Future M, a customer, at around 24,000 to 60,000 tons per year. The contract period will be six years after POSCO Future M's request, but the request will be made by 2025 at the latest. The transaction price was decided to be decided by the two companies in consultation every quarter based on product quality and transaction volume based on objective market prices.

Starting with 24,000 tons in the first year from next year, POSCO Future M is expected to bring in up to 60,000 tons of natural graphite raw materials annually to produce cathode materials. With 60,000 tons of natural graphite, 30,000 tons of anode material can be made, which is an amount that can be supplied to 600,000 electric vehicles. POSCO Future M's current production capacity of natural graphite cathode materials is 74,000 tons, and it plans to increase this to 182,000 tons by 2030.

The decision follows China’s tightening of export rules for graphite in December, which significantly impacted Korean battery manufacturers dependent on these materials.

POSCO Future CEO Kim Jun-hyung was quoted by the news agency as saying: “Graphite is the most troubling part when making batteries.

“We are importing 100% of natural graphite from China, but we are planning to bring natural graphite from Africa, such as Madagascar, and process it in South Korea.”

South Korea’s heavy dependence on China for graphite was evident last year, with 93% of its natural graphite and 95% of its synthetic graphite being imported from the country, according to customs data.

According to the IRA, electric vehicle subsidies will not be available in the U.S. if key minerals for batteries are sourced from the Foreign Concern Group (FEOC) from 2025. In addition, as China has selected natural graphite as an export control target since December last year, graphite has been classified as an item that urgently requires diversification of supply chains.

"If natural graphite is brought from Africa, not China, processed, and made at the Sejong plant, it becomes a qualified product of the IRA," POSCO Holdings' head of eco-friendly future materials Kim Joon-hyung said at the groundbreaking ceremony of the Gwangyang anode material plant in Jeollanam-do on the 22nd of last month. "We are reviewing the investment and will soon disclose the visible direction."

POSCO Group is preparing to introduce large amounts of graphite in other African countries in the long run. POSCO International is preparing to procure up to 90,000 tons of natural graphite annually from Madagascar and Tanzania in Africa.