South Korean steelmaker Posco Holdings said Tuesday that it will produce lithium hydroxide for secondary battery materials using lithium reserves from Argentina’s salt lake, making it the first domestic company to do so.

The groundbreaking ceremony for the lithium hydroxide production facility for secondary batteries took place at Yulchon 1st Industrial Complex in South Jeolla Province on Tuesday. The event was attended by the National Assembly's Special Committee on Advanced Strategy Industries member Rep. Ahn Cheol-soo; Posco Group Chairman Choi Jeong-woo; and LG Energy Solution President and Chief Procurement Officer Kim Myung-hwan.

"We will enhance the global competitiveness of lithium and other mineral resources and contribute to the development of domestic industries, including the secondary battery sector, by leading the localization of materials,” said Posco Group Chairman Choi Jeong-woo.

The lithium hydroxide produced by the newly established lithium plant is expected to have an annual production capacity of 25,000 metric tons, which is equivalent to producing approximately 600,000 electric vehicles.

Posco Holdings plans to invest 575 billion won ($452 million) to complete the facility by 2025. The construction of the factory, as well as the funding, will be handled by Posco-Pilbara Lithium Solution, Posco Holdings’ fully-owned subsidiary.

The construction of the lithium hydroxide plant marks a significant step in Posco Holdings' investment in Argentina's lithium resources, which was announced in October last year as part of the production of lithium carbonate for lithium hydroxide for use in final battery manufacturing.

The upstream process of producing lithium carbonate, the raw material for lithium hydroxide, will be carried out at the salt lake in Argentina acquired by Posco, while the downstream process of producing lithium hydroxide will take place domestically.

The company plans to further expand lithium production based on the Hombre Muerto salt lake through additional investments, aiming to reach a maximum production capacity of 100,000 tons by 2028.