Posco Future M advances supply chain independence with new precursor plant

Korea Herald

10-06-2025

Facility aims to meet rising demand for China-independent battery materials amid shifting US trade policies
Korean battery material manufacturer Posco Future M officially opened its new precursor plant Tuesday in Gwangyang, South Jeolla Province, marking a key step in its efforts to build a self-sufficient supply chain.
'The completion of this precursor plant, following Posco Group's establishment of its own nickel supply chain, marks the realization of a fully self-sufficient system, from raw materials to intermediate products and the finished cathode material,' said Eom Gi-chen, CEO of Posco Future M, during the opening ceremony.
'In today's rapidly changing global supply chain landscape, the Gwangyang precursor plant will enhance the competitiveness and growth of Korea's battery industry.'
The 22,400 square meter facility has an annual production capacity of 45,000 metric tons of precursor — a chemically synthesized mixture of metals used in cathode materials — enough to support battery production for 500,000 electric vehicles, the company said.
The facility, which has been ramping up operations since May, was largely in operation during a media tour held the same day. The plant was filled with around 50 large metal tanks spread across the factory floor.
The precursor production process involves six main steps: dissolving metals in purified water, inducing chemical reactions with catalysts to form precursor crystals, then washing, dehydrating, drying and packaging the final product.
'The reaction process is the core of precursor manufacturing, as it determines the material's density and elemental ratio, both of which are tailored to meet customer specifications,' a company official said, noting Posco Future M's flexibility in adjusting compositions to client needs.
Currently, the company uses nickel, cobalt and manganese to produce precursors for NCM cathodes used in electric vehicle batteries, according to the order by Ultium Cells, a US-based 50:50 joint venture between LG Energy Solution and General Motors.
'All precursors produced at this facility are currently supplied to Ultium Cells,' the official added.
The company said the timely launch was driven by growing demand from customers for China-independent supply chains, while many other battery projects have been delayed amid sluggish EV demand.
The US Inflation Reduction Act disqualifies EV batteries containing materials from 'foreign entities of concern,' including China, from tax credit eligibility. This policy shift has prompted automakers to reduce reliance on Chinese suppliers, who currently dominate 90 percent of the global precursor market.
To meet these evolving demands, Posco Future M said it has also secured alternative sources for raw materials used in precursor production.
'We understand the risks automakers face when their supply chains are overly concentrated in China. Regardless of cost considerations, that's where the competitiveness of our plant comes in,' said Lee So-young, head of the business strategy planning group at Posco Future M.
'As US policies continue to evolve, we're working to establish a supply chain that's less exposed to such changes, including sourcing raw materials independently of Chinese suppliers.'
The plant's 10 production lines are controlled by about 10 staff members via monitors that provide a real-time overview of the process. With a high degree of automation, the company aims to enhance quality control of its cathod materials — a factor it says was more difficult to achieve when using externally sourced precursors.
'When customers request specific features, many of them cannot be achieved simply by processing third-party precursors,' Lee added. 'We believe our ability to meet those demands in both quality and cost also gives us a key competitive edge.'