Posco Holdings said Thursday that construction of a plant in Argentina kicked off to commercialize lithium, a key material for electric vehicle battery production. 

With the lithium extraction plant in Argentina and Posco’s mining rights in the South American country, the company will be able to entirely manage production of lithium hydroxide, which is used in the production of cathode material for lithium-ion EV batteries.

Lithium is extracted from brine or seawater, which is rich in concentration of lithium carbonate -- chemical compounds used in lithium-ion batteries. South American countries, such as Chile, is known to have the world’s largest lithium reserves with 8 million metric tons.

“Today marks a historic day, taking the first step of our long-prepared lithium business. I’m sure that this brine lithium commercialization project will set a foothold for the group’s battery material business,” Posco Group Chief Executive Officer Choi Jeong-woo said at the groundbreaking ceremony.

Located at an altitude of 4,000 meters near Salar del Hombre Muerto, the company’s plant will produce lithium through extraction from brine. It is slated to produce 25,000 tons of lithium hydroxide annually when construction is completed in the first half of 2024. Such a volume is equivalent to the amount needed to manufacture batteries that could power 600,000 electric vehicles. 

Regarding the mining possibility and yield, the group said it is expected that at least 2.8 million tons of lithium carbonate will be produced from the salt lake adjacent to their Argentinian plant.

Lithium production is one of the group’s seven core businesses. The group, which relied on steelmaking for decades, invested some $839 million for the Argentina project so far under its drive to secure a new growth engine. The construction and operation of the lithium plant and financing will be carried out by Posco Argentina, a wholly-owned subsidiary of Posco Holdings. 

In addition to the lithium business, Posco plans to increase its annual capacity through a second round of investment to expand its production volume up to 100,000 tons by 2028. Such an amount is sufficient to fulfill demand for about 2.4 million EVs, according to the company.

The company’s own lithium extraction technology would help Posco become one of the top three lithium producers in the world by 2030.
Its lithium extraction methods include brine, hard rock production and recycling of waste batteries.

Earlier in the week, Posco chief Choi met with Argentine President Alberto Angel Fernandez, Minister of Industry of Argentina in the Federal Government Matias Kulfas, and Deputy Minister of Mining Fernanda Avila in Buenos to discuss cooperation in the battery material business.