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Huayou Cobalt and POSCO Chemical Have Inked Ternary Precursor Deal That Exceeds 170,000 Tons in Quantity

published: 2023-01-24 9:30

On January 4, Huayou Cobalt announced that it has entered into a new long-term supply agreement with Zhejiang Puhua New Energy Materials and POSCO Chemical. Under the agreement, Huayou Cobalt and its subsidiaries will provide Puhua and POSCO Chemical with 15,000 tons and 160,000 tons of ternary precursors respectively during the period from 2023 to 2025.                                                             

POSCO Chemical has been a material supplier to the major South Korean battery manufacturers, including LG Chem, Samsung SDI, and SKI. POSCO Chemical is also the only South Korean battery material supplier that offers both cathode and anode products. Its largest shareholder and parent is the global steel giant POSCO.

Huayou Cobalt has maintained a very fruitful partnership with POSCO Chemical over the years. Earlier in March 2020, Huayou Cobalt through a subsidiary sealed a major supply agreement with POSCO Chemical. As per the agreement, the subsidiary provided POSCO Chemical with 76,259 tons of N65 precursors during the period from March 2020 to December 2022.

As the largest Chinese supplier for cobalt-based products, Huayou Cobalt has built an extensive product portfolio for battery materials. The company develops and manufactures lithium- and cobalt-based materials used in a wide range of Li-ion batteries. The company is among the top material suppliers in the global Li-ion battery industry in terms of sales. Additionally, it is among the major Chinese battery material suppliers that offer cathode products as well as ternary precursors.

Furthermore, Huayou Cobalt is recognized for the competitiveness of its products and its R&D capability. The company has leveraged these advantages to capture a key role in the supply chains of the major manufacturers for NEV power batteries. Examples include CATL, BYD, LG Chem, SKI, and EVE. Li-ion batteries containing its technological solutions are now being equipped in high-end NEVs under North American and European car brands such as Tesla, Volkswagen Group (i.e., the MEB platform), the Nissan-Renault alliance, Volvo, and Jaguar Land Rover Automotive.

Based on the available information, Huayou Cobalt and POSCO Chemical began their partnership in 2018 with the formation of two joint ventures headquartered in Tongxiang, a city in China’s Zhejiang Province. These joint ventures are Zhejiang Huayou Puxiang New Energy and the aforementioned Zhejiang Puhua New Energy Materials. Huayou holds a 60% stake in Puxiang and a 40% stake in Puhua. The two joint ventures have already become fully operational and manufacture ternary precursors and cathode products. Both of them have a production capacity of 5,000 tons per year, and their new production capacity in development now totals around 25,000 tons per year.

Regarding recent activities related to capacity expansion, POSCO Chemical disclosed on August 25, 2022, that it will work with Huayou Cobalt to build new production lines for ternary precursors and cathode products. Their joint investment in the new production lines is estimated around KRW281 billion (CNY1.56 billion). Then, on January 19, 2022, Huayou revealed that its holding subsidiary Zhejiang Huayou New Energy Technology and POSCO Chemical will inject additional capital into Puxiang and Puhua. The total capital increase will come around CNY 3.083 billion, of which CNY 1.445 billion and CNY 1.638 billion will go to Puxiang and Puhua respectively.

Currently, Puxiang has a production capacity of 5,000 tons per year. The company aims to expand its production capacity for precursors to 30,000 tons per year. Therefore, Huayou Cobalt and POSCO Chemical will jointly invest in the key and auxiliary equipment that Puxiang will need to manufacture more N8X precursors. This type of precursor is used in the manufacturing of the cathodes for NCM and NCMA batteries. Both parties plan to have Puxiang’s 300,000 tons per year of production capacity ready for the commercial production phase by December 2023.

Turning to Puhua, its current production capacity is also around 5,000 tons per year. The company wants to scale up to 29,000 tons per year for cathode materials by 2025. Therefore, Huayou Cobalt and POSCO Chemical will make equipment investments for the joint venture as well. The goal is to have Puhua operate with 19,000 tons per year of production capacity for N8X cathode materials by June 2024 and the additional 10,000 tons per year by June 2025.

Huayou Cobalt stated that latest long-term supply agreement will further strengthen the partnership between the two parties and expand its market share for ternary precursors. All in all, the deal will enhance the company’s position in the market for materials used in Li-ion batteries.

This article is a translation of a Chinese article posted by TrendForce. It contains information that is either sourced from other news outlets or accessible in the public domain. Some Chinese names are transcribed into English using Hanyu Pinyin.

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