Posco has secured deals worth nearly 1.2 trillion won ($9 billion) to supply rare earth permanent magnets to finished carmakers in North America and Europe, marking a significant step towards creating a global permanent magnet supply chain outside of China.
The South Korean company announced on Tuesday that its US operation has signed a deal worth about 900 billion won to supply permanent magnets to an unnamed automaker in North America from 2026 to 2031. These magnets will be used in drive motors for the automaker’s mid and large-size electric vehicles.
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Additionally, Posco International’s German operation has secured a separate order worth about 260 billion won to supply permanent magnets to a premium auto brand in Europe from 2025 to 2034.
To produce these magnets, Posco International will use rare earths sourced from the US, Australia, and Vietnam. This move aims to reduce the global market’s reliance on rare earths from China, which currently accounts for 90% of international rare earth supplies.
The company’s green mobility driving system business is expected to benefit significantly from these deals, which are part of Posco Group’s efforts to promote new growth engines.
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Following these agreements, Posco’s trading and energy exploration unit plans to accelerate the expansion of the global permanent magnet supply chain, excluding China.
Star Group Industrial Co., Korea’s sole producer of rare earth permanent magnets, will manufacture the magnets for these deals. Posco International, with its extensive global network, will handle their sale and distribution.
The permanent magnet is a crucial component of a drive motor in electric vehicles (EVs), playing a vital role in their efficiency. More than 80% of EV driving motors use rare earth permanent magnets due to their superior magnetism.
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Posco International’s partnership with Star Group is a strategic move to challenge China’s dominance in the global rare earth permanent magnet market. Star Group operates a factory in North Gyeongsang Province, producing magnets for autos, information technology devices, and industrial motors.
The two companies are also planning to jointly build a permanent magnet-producing factory in the US, although it is yet to be confirmed if this facility will supply magnets for the latest deals.
