South Korea’s POSCO Holdings Inc. and Australian mining firm Hancock Prospecting have signed a memorandum of understanding to jointly establish a lithium production facility capable of delivering 30,000 tons annually, POSCO announced on Tuesday. The plant aims to bolster supply chains for lithium, a crucial material for electric vehicle (EV) batteries.
The two companies will determine the location for the plant and finalize key investment details at a later stage, POSCO said in a statement. The agreement, signed online, represents an expansion of the firms’ long-standing collaboration beyond iron ore and natural gas ventures.
“The decision to pursue this lithium production initiative reflects our commitment to strengthening our EV battery materials supply chain,” POSCO said in its release, adding that the company plans to leverage Hancock’s resource portfolio to achieve its goals.
The partnership aligns with POSCO’s efforts to secure critical materials in response to shifting global EV demand and regulatory changes. The steel giant has been investing in lithium extraction and production infrastructure, including a salt lake lithium facility in Argentina, completed this year with an annual capacity of 25,000 tons. POSCO’s combined lithium output from multiple sites is sufficient to support the production of approximately 1.6 million EVs annually.
Hancock Prospecting’s existing mining operations further enhance the collaboration, building on a history of joint ventures. In 2010, POSCO acquired a 12.5% stake in Hancock’s Roy Hill iron ore mine, and in 2020, the companies jointly acquired Australian natural gas supplier Senex Energy.
The collaboration is expected to mitigate potential disruptions posed by the U.S. Inflation Reduction Act (IRA), which restricts subsidies to EVs manufactured or with components sourced from the U.S. or its free trade partners. By aligning their operations with IRA requirements, the partnership aims to ensure a steady supply of battery materials for EV manufacturers.
“This partnership underscores our shared vision of advancing sustainable materials production while navigating evolving market dynamics,” a Hancock representative noted.
POSCO’s diversification into lithium production adds to its existing ventures, including its 2018 acquisition of the Hombre Muerto salt lake in Argentina. The company stated its continued focus on the entire EV battery lifecycle, from raw material mining to recycling, to meet rising demand.
