South Korea’s POSCO International Corp. has signed a long-term supply agreement for natural graphite, a key material used in electric vehicle batteries, with Faru Graphite Corp., a subsidiary of Australian mining company Black Rock Mining Ltd., further solidifying its value chain in the battery materials business.

Under the agreement, POSCO International will invest $10 million to secure a total of 750,000 tons of natural graphite over a period of 25 years, the company said Monday.

Faru Graphite owns the Mahenge graphite mine in Tanzania, which is the world’s second-largest reserve of natural graphite based on storage capacity.

POSCO International plans to supply the natural graphite obtained during the cited period to POSCO Future M Co., a subsidiary of POSCO Group that is engaged in the secondary battery business.

Graphite plays a crucial role as a core material in the cathodes of secondary batteries. It stores and releases lithium ions, which enable the flow of electricity.

Demand for graphite has been rising sharply amid rapid growth of the electric vehicle market. By 2035, the demand for natural graphite is projected to reach 6.5 times the global supply in 2022.

The latest agreement, in the meantime, exemplifies the synergy created for battery materials business within POSCO Group.

In 2021, POSCO Holdings acquired a stake of about 15 percent in Black Rock Mining, laying the foundation for exploring business opportunities.

Subsequently, POSCO International leveraged its trading capabilities to establish a business structure that enables the long-term supply of raw materials to POSCO Future M to complete the value chain.

POSCO International’s strategy is to expand its business in the battery materials sector, particularly in response to the expansion of the eco-friendly vehicle industry. In addition to graphite, the company is also engaged in the supply of copper foil materials and battery recycling.

By Seo Jin-woo and Minu Kim

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