POSCO seeks restructuring to invest $1.9 billion in battery materials

POSCO Holdings Inc. aims to increase its shareholder value through an ambitious program that includes securing 2.6 trillion won ($1.9 billion) by restructuring its investments in steel and battery materials and redeeming 2 trillion won worth of its own shares by 2026.

The holding company of South Korean steel giant POSCO Group will sell or liquidate more than 97 percent of 120 non-core assets and low-profit companies by 2026, the company said on Friday at its annual Value Day event for institutional investors and analysts.

POSCO Holdings will raise 2.6 trillion won through restructuring and invest the fund in the battery materials business, its new growth engine led by POSCO Future M Co. The company is testing solid-state electrolytes and lithium metal anodes and aims to accelerate the early commercialization of key materials for advanced rechargeable batteries.

Its sulfide-based solid-state electrolyte is currently undergoing a verification process led by Samsung SDI Co. The company plans to produce a sulfide-based solid-state battery in 2027, according to industry insiders.

POSCO Future M also produces prototypes of lithium metal anode materials and tests the samples with a global automobile manufacturer. POSCO’s battery materials department is developing a more reliable anode with a width of 600 millimeters and a protective coating.

Sales target adjusted

POSCO aims to achieve annual sales of 11 trillion won from battery materials such as cathodes, anodes, lithium and nickel by 2026. The company is in the process of completing construction of facilities to produce 395,000 tons of cathodes, 114,000 tons of anodes, 96,000 tons of lithium and 48,000 tons of nickel by 2026.

Given the continued slowdown in global demand for electric vehicles, the company has adjusted its last year’s sales target of 16 trillion won (about 121 billion euros) in annual sales of battery materials by 2025.

POSCO will also invest in the production of upstream steel products, semi-finished products such as slabs and billets, in India and the US. The company has to produce these mainly in the US because the country has an import quota for Korean steel.

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Led by Chairman and CEO Chang In-hwa, who began his three-year term in March, POSCO aims to increase the market capitalization of the entire group from the current 70 trillion won to 200 trillion won by 2030.

The holding company will cancel the shares it is now buying back shortly after the buyback, with the exception of the shares it is supposed to hold for its employees, said Jeong Ki-seop, chairman and CEO of POSCO Holdings, on Friday.

To achieve this goal and increase value for shareholders, POSCO Holdings will retire 2 trillion won worth of its own shares by 2026.

The holding company initially plans to cancel shares worth 1.9 trillion won (10 percent) of its own stock. The company has already cancelled shares worth 660 billion won, the company said in its regulatory filing on Friday.

In addition, the company repurchased and de-circulated 100 billion won worth of shares, according to regulatory filings.

Write to Hyung-Kyu Kim at [email protected]
Jihyun Kim edited this article.