Posco Chemical EV battery materials sales surge

South Korea's Posco Chemical boosted sales of anode and cathode materials sharply in the second quarter, as expanding production capacity enabled the company to capitalise on rising demand for electric vehicle (EV) batteries.

Posco Chemical, the newly merged chemical materials unit of steelmaker Posco, raised anode materials sales by 40pc to 31.2bn won ($26.5mn) in April-June from W22.3bn a year earlier. Cathode materials sales increased by 43pc to W31.2bn from W21.8bn.

Posco Chemical expects to increase anode materials production capacity by 45pc to 44,000 t/yr in October, one month ahead of its previous target. A second phase expansion will take capacity to 74,000 b/d by 2021.

The firm also is preparing to open a demonstration plant next year for production of synthetic anode materials, using coal tar from Posco's Pohang steel mill rather than graphite. Commercial production is scheduled to start at 20,000 t/yr in 2022.

The company completed an expansion of its cathode materials production capacity to 15,000 t/yr from 9,000 t/yr in May. More production lines at its plant in Gwangyang, on South Korea's southern coast, will come on stream in each of the next three years, pushing capacity to a target of 57,000 b/d by the end of 2022. Posco previously said cathode materials capacity would be raised to 62,000 b/d by 2022.

The steelmaker is betting on battery materials as a key growth area, on expectations global EV sales will double to 4mn units this year and continue to rise rapidly as the industry reaches a critical mass of availability to consumers. The company is targeting W2 trillion/yr in battery material sales by 2021.

Posco Chemical sees another demand breakthrough occurring as China, the world's largest EV market, opens up to foreign battery makers. Leading South Korean battery maker LG Chem, one of its largest customers, will increase its Chinese market share to 7-8pc in 2021 from zero currently, it said, citing an analyst projection.

Posco Chemical suffered a 42pc drop in second-quarter sales for energy storage systems (ESS), despite the rise in overall materials demand from battery makers. South Korean ESS makers halted production earlier this year as government investigated a spate of battery fires. The probe was finally completed in June, two months behind schedule. Posco Chemical sees demand in its ESS segment recovering over the second half of this year as customers resume production.

Posco Chemical was formed through the merger of anode materials maker Posco ChemTech and cathode materials maker Posco ESM in April to increase their efficiency. The cathode materials expansion will boost the company's production of high-capacity NCM622 battery cells by 24,000 t/yr, enough to supply 300,000 EV battery packs.