이 기사는 2021년 10월 08일 07:34 thebell 에 표출된 기사입니다.

The legal dispute between LG Energy Solution and SK Innovation which made global media headlines earlier this year has underlined the importance of the US electric vehicle market for South Korean battery manufacturers. Samsung SDI, another major South Korean battery maker, is also ramping up to enter the US market.

By contrast, Posco Chemical, a South Korean battery materials maker, in August announced a plan to build its first overseas plant in China, a move likely aimed at diversifying its customer base across geographies and gaining a foothold in the world’s largest electric vehicle market.

The decision highlights that the company put China ahead of the US in its overseas expansion drive amid intensifying competition for global electric vehicle supremacy between the two nations. It also followed earlier efforts by Posco, Posco Chemical's parent company, to enter the Chinese market.

In partnership with China’s Huayou Cobalt – the world’s largest cobalt refinery with an annual production capacity of 40,000 tons – Posco established two joint venture factories in Zhejiang province in 2018. One factory produces cathodes with Posco and Huayou holding 60% and 40% stakes respectively, while the other makes precursors with the two companies holding 40% and 60% stakes respectively.

The production lines each have an annual capacity of 5,000 tons. Posco and Huayou plan to significantly increase their capacity to 35,000 tons per year by injecting additional funds through a capital hike.

Posco Chemical said in the August announcement that instead of Posco, it would participate in the capital increase and invest a total of 281 billion won ($236 million) in the two factories in China. Post the capital increase, Posco Chemical will replace its parent company to become the largest shareholder in the joint venture factory that produces cathodes.

The move is part of efforts by the broader Posco Group to grow its chemical unit as a global player in the secondary battery materials market. Posco Chemical, which used to make anodes only, merged with Posco EMS in 2019 to expand its business to include cathode production.

“Posco Chemical produces electric vehicle battery materials, while Posco focuses on providing battery metals such as lithium and nickel,” an official at Posco Group said.

China's major battery makers dominated the global electric vehicle battery market in the first half of this year with a 43% share, according to data from SNE Research. China is also a strategically important market for Posco Chemical, with 48% of its battery materials revenue in 2020 coming from the country.

The company’s focus on expanding its production capacity in China is also in line with its strategy to diversify its customer base.

Posco Chemical supplies its anodes to all three major South Korean battery makers – LG Energy Solution, SK Innovation and Samsung SDI – while most of its cathode revenue comes from LG Energy Solution. If Posco Chemical decided to build its overseas plant in the US, this would result in an even higher reliance on the LG Chem’s battery unit.

Cathodes that will be produced at the Chinese joint venture will be supplied mainly to local battery makers and South Korean players targeting the Chinese market. Posco Chemical is in an advantageous position to build its Chinese presence with its strategic partnership with Huayou.

“We explored all options and decided to make an investment in China first where Posco already built a foundation,” an official at Posco Chemical said. “We will focus on producing cathodes and precursors in China and currently has no plan to make anodes there.”

In an effort to reinforce its supply chain, Posco Chemical last month bought a 13% stake in Qingdao Zhongshuo New Energy Technology, which makes spherical graphite, a raw material needed in making anodes. The Chinese company will begin to supply spherical graphite to Posco Chemical in 2022.

Posco Chemical also plans to build plants in the US and Europe in the future. “We will establish a stable supply chain by opening plants in other regions, such as the US and EU, where demand for electric vehicles is rising,” said the Posco Chemical official. (Reporting by Sang-hee Park)