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Battery materials makers seek to continue solid growth in 2023

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POSCO Chemical CEO Kim Joon-hyeong, right, and Samsung SDI CEO Choi Yoon-ho pose after signing an agreement on Monday regarding the former's supply of high-nickel cathode materials worth 40 trillion won ($33 billion) to the latter over the next 10 years. Courtesy of POSCO Chemical
POSCO Chemical CEO Kim Joon-hyeong, right, and Samsung SDI CEO Choi Yoon-ho pose after signing an agreement on Monday regarding the former's supply of high-nickel cathode materials worth 40 trillion won ($33 billion) to the latter over the next 10 years. Courtesy of POSCO Chemical

By Park Jae-hyuk

Korea's leading battery material producers are ramping up efforts to overcome their disappointing earnings during the fourth quarter of last year, so that they can continue their solid growth this year, capitalizing on the growth of the global electric vehicle (EV) market, according to industry officials, Tuesday.

The latest example was POSCO Chemical's agreement with Samsung SDI to supply 40 trillion won ($33 billion) worth of high-nickel cathode materials over the next 10 years. The contract is the biggest and longest-lasting one in POSCO Chemical's history.

POSCO Chemical said the contract will enable it to leap forward as it will diversify its product portfolio from NCM (nickel, cobalt, manganese) cathode materials to NCA (nickel, cobalt, aluminum) cathode materials, which can maximize battery efficiency.

"As we are developing LFP (lithium ferro-phosphate) cathode materials, our production lineup is likely to diversify further, depending on the market conditions," POSCO Chemical said in a press release.

The POSCO Group affiliate made the announcement after revealing its fourth-quarter operating profit stood at 3.3 billion won, down 83.8 percent from a year earlier. The result fell short of the 63.5 billion won which had been the consensus of securities analysts.

Its annual operating profit, however, reached 165.9 billion won last year, up 36.3 percent from the previous year. Its sales also rose 66 percent year-on-year to 3.3 trillion won in 2022.

Given that the company will start supplying 13.7 trillion won worth of high-nickel cathode materials this year to Ultium Cells, a joint venture between LG Energy Solution and General Motors, its revenue is expected to keep growing.

"There remains the possibility that the company wins additional orders from domestic and foreign companies during the first half of this year," Hanwha Investment & Securities analyst Lee Yong-wook said. "If it makes additional announcements on supply contracts, its production capacity target could rise"

POSCO Chemical's cathode materials / Courtesy of POSCO Chemical
POSCO Chemical's cathode materials / Courtesy of POSCO Chemical

EcoProBM, another Korean cathode materials supplier, saw a 260.6 percent increase in its annual sales to a record 5.3 trillion won last year, and a 232.6 percent rise in its operating profit to an unprecedented 382.5 billion won in 2022, although its fourth-quarter earnings fell short of the market consensus.

In addition, it will resume this year the operation of its Ochang factory in Cheongju, North Chungcheong Province, which caught fire as a result of boiler room explosions in January last year. The factory of EcoProEM, a joint venture between EcoProBM and Samsung SDI, will also start production in the first quarter of this year.

LG Chem posted 8 trillion won in sales and 932 billion won in operating profit last year for its advanced materials sector, which includes its battery materials business. As a result, the company avoided operating at a loss in 2022, although its earnings from the petrochemical sector showed a sharp decrease.

Industry officials expect the growth of Korean battery material suppliers to gain momentum, once the government gives approvals for the export of their technologies.

Last week, the Ministry of Trade, Industry and Energy allowed POSCO Chemical to utilize its technologies for high-nickel cathode materials at its factories in North America and China.

EcoProBM, which unveiled last year its plan to build a factory in North America, will apply for the ministry's approval to export its technology during the first quarter of this year at the earliest, with hopes to secure it by the end of this year.

L&F, a Kosdaq-listed cathode materials firm, plans to reapply for the ministry's approval to export its tech after March, as it failed to win approval last year.


Park Jae-hyuk pjh@koreatimes.co.kr


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