South Korean steel giant Posco signed a contract to acquire mining tenements in Argentina from Australian lithium miner Galaxy Resources for $280 million, the company said Monday.

The contract gives Posco full mining rights for an area of 17,500 hectares in a northern sector of the Salar del Hombre Muerto salt flat. As large as one-third of the city of Seoul, the land contains salt water capable of producing 25,000 metric tons of lithium a year, if extracted.



With the contract, Posco will be able to secure 55,000 metric tons of lithium a year starting from 2021, the company said.

In February, the company bought 4.75 percent of shares and convertible bonds of Australia-based lithium and tantalum producer Pilbara Minerals. Posco will be able to produce 30,000 tons of lithium carbonate annually from 2020, officials said.

The world’s fifth-largest steelmaker, Posco jumped into the battery component business in recent years to secure sustainable growth amid declining demand on steel.

Demand for lithium has rapidly risen on growing popularity and business expansion of secondary cells, used to power electric cars and smartphones.

By Cho Chung-un (christory@heraldcorp.com)