[Business Insight] POSCO Future M

The EK Global Research Team conducts research on key and promising companies across various industries and provides recommendations for future growth strategies. In this edition, we will explore POSCO Future M Co., Ltd.

Overview of POSCO Future M

POSCO Future M Co., Ltd. is the only South Korean company that simultaneously produces both cathodes and anodes for secondary batteries. It serves as a core pillar driving POSCO Group’s new decarbonization businesses. In line with the explosive growth of the global EV battery market, the company is working to secure a stable supply of mineral resources, promote technological innovation, and diversify its customer base—thereby solidifying its unique position in the market through various strategic initiatives.

POSCO Group has set an internal target of achieving carbon neutrality by 2050. Additionally, it is transitioning from its traditional core business of steel manufacturing to a new focus on secondary battery materials, aiming to smoothly integrate existing and new business segments at an organizational level. This transition involves an emphasis on expanding LNG infrastructure, engineering, and digital transformation capabilities, particularly regarding upstream investments for steel operations. It also entails restructuring less profitable, less efficient facilities. By way of example, in November of last year, POSCO Group announced the closure of its Pohang Steelworks No. 1 Wire Rod Mill, which had been in operation for more than 45 years since 1979.

Expanding New Businesses through M&A

By pursuing M&A-based strategies, POSCO Group has been discovering and nurturing new growth businesses, as exemplified by its development of the secondary battery materials sector. In this regard, the secondary battery materials business aims to secure high-purity raw materials in advance and promote technological innovation to reduce costs and improve operating margins. The ultimate goal is to raise the contribution of POSCO Future M to group-wide revenue to 50%.

Global EV Battery Market

An EV battery comprises four main components—cathodes, anodes, electrolytes, and separators—with the cathodes and anodes accounting for about two-thirds of the battery’s total cost. This market is undergoing rapid transformation driven by the EV transition policies of the US, the Europe, and China, as well as by the restructuring of supply chains. Notably, major legislative initiatives in mature markets, such as the Inflation Reduction Act (IRA) in the US and the Critical Raw Materials Act (CRMA) in the EU, are key variables influencing the market expansion plans of EV battery and automotive OEMs.

Competitive Landscape and POSCO Future M’s Strengths

In the high-nickel, ternary-cathode materials segment, POSCO Future M faces global leaders such as EcoPro BM, LG Chem, L&F, and Umicore. In the anode materials segment, 9 of the top 10 players are Chinese companies, with POSCO Future M being the only South Korean enterprise among them.

In May 2024, the US released its final IRA guidelines, categorizing graphite as a mineral whose origin is virtually impossible to trace. Under the “Foreign Entities of Concern (FEOC)” rule, the regulation against Chinese graphite will be deferred until the end of 2026. Although this has dealt a short-term blow to POSCO Future M’s anode material sales, which had anticipated benefits from the shift away from Chinese suppliers, there is some speculation that the second Trump administration may rescind these exceptional guidelines for graphite.

Key Drivers Influencing Strategic Direction

Considering the uncertainties and potential impact of policies and the marketplace in the EV battery sector, the following emerge as major drivers of industry dynamics:

• Demand for low-cost EV models

• Uncertainty in mineral resource supply

• Subsidy programs in the US and the Europe

• Ongoing supply chain restructuring

Strategic Directions

1. Cost Reduction

   • Lower expenses through long-term mineral contracts and internalizing the value chain

   • Reduce reliance on high-priced core raw materials via technological innovation

2. Customer Diversification

   • Continue collaboration not only with Samsung SDI and LG Energy Solution, but also with North American and European EV manufacturers

3. Technological Innovation

   • Develop silicon anode materials and high-voltage cathodes

   • Foster partnerships with POSTECH and overseas research institutions to secure a competitive technological edge

Recommended Execution Roadmap

POSCO Future M should focus on reinforcing its market presence by prioritizing cost reduction and customer diversification.

• Short-term Goals (2024–2025)

  • Diversify production to include low- and mid-priced materials

  • Reduce dependence on Chinese sources for critical minerals

• Mid- to Long-term Goals (2026–2030)

  • Attain a Top 3 global position and establish a full value-chain ecosystem

Expected Outcomes

• Strengthened cost competitiveness through stable resource procurement and technological innovation

• Enhanced flexibility in responding to external market shifts by broadening the customer base

• Establishment as a central growth engine for the POSCO Group, effectively transitioning from “steel for the nation” to “materials for the nation”

By pursuing systematic and strategic initiatives, POSCO Future M aims for sustained growth in the global EV battery materials market, positioning itself as a global leader in this burgeoning field.

※ Disclaimer: The information in this report was gathered and researched from sources believed to be reliable and is presented in good faith. EK Global cannot be held liable for data that might be incomplete, inaccurate, or outdated, nor for data derived from internet pages or sources over which EK Global has no control. The information in this report does not have a legal or juridical character.