Posco Chemical Co., a refractory and secondary battery materials making unit of South Korean steel giant Posco, has completed expansion to triple capacity in producing high-nickel cathode, a key component for electric vehicle batteries, to meet growing demand for environmentally-friendly vehicles.

Posco Chemical said on Thursday that it finished construction of a second-stage production line with annual capacity of 25,000 tons at its cathode material facility in Gwangyang in South Jeolla Province. Upon expansion, annual output of high-nickel cathode materials used in the manufacturing of secondary batteries has been tripled from current 5,000 tons.

The completion ceremony was attended by Min Kyung-jun, president at Posco Chemical, Kim Yung-rok, governor of South Jeolla Province, Kim Myung-hwan, president at LG Chem Ltd., and other officials from the community and industry.

Cathode material is a key component that helps raise battery output and capacity. It accounts for 40 percent of total secondary battery cost. High-nickel cathode materials are usually used in making electric vehicle batteries as higher the ratio of nickel, the better efficiency.

The affiliate under steelmaking giant Posco is now capable of producing 40,000 tons of cathode materials a year when including the 10,000 ton facility in Gumi in North Gyeongsang Province. The Gumi plant is dedicated to producing multiple products in small quantity.

Posco has been diversifying materials business to compensate for sagging sales from its traditional steelmaking under heavy Chinese competition.

The company plans to boost annual capacity of its Gwangyang plant to up to 90,000 tons in the future depending on market conditions. The capacity is enough to provide 60 kilowatt-hour high-performing batteries to 750,000 electric cars.

Cathode materials produced at the plant will be supplied to electric battery production lines in Korea, Europe, China, and the United States.

The global electric battery market is projected to grow sharply from 8.5 million units this year to 22 million units in 2025. Cathode material industry is also forecast to grow by an annual average of 33 percent from 460,000 tons last year to 2.75 million tons in 2025.

Posco Chemical aims to raise annual production capacity of natural graphite anode material to 105,000 tons synthetic graphite anode material to 16,000 tons, and cathode materials to 90,000 tons by 2023.

As of 11:25 a.m. Friday, shares of Posco Chemical were trading at 54,200 won, up 3.63 percent from the previous day.

By Choi Geun-do and Lee Eun-joo

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