Posco Chemical said Wednesday that its joint venture with OCI Co., called P&O Chemical, has started construction of a new local plant to produce a key coating material used in secondary batteries.

The plant, located Gongju, South Chungcheong Province, will have an annual production capacity of 15,000 tons of pitch, a carbon material used for coating the surfaces of anodes, a key component in rechargeable batteries.

The two companies held a ground-breaking ceremony on Wednesday, with their top executives and city officials in attendance.

Posco Chemical and OCI set up the 51:49 joint venture in 2020 to bolster its competitiveness in the advanced materials sector.

Under the agreement, the two firms plan to invest 96.3 billion won ($69.2 million) to complete the construction of the new plant by 2023.

"Cooperation with OCI will help strengthen the competitiveness of the Korean battery industry, as it localizes the production of pitch," said Kim Joo-hyun, head of planning and support division at Posco Chemical.

"We will expand cooperation between the two companies in the field of high-tech materials and heighten our ability to grow,” he added.