South Korea's Steel Giant POSCO Invests $40 Million to Break Dependence on Chinese Graphite! Aims to Produce 347,000 Tons of Graphite Annually, Challenging China's Supply Dominance!

According to media reports, South Korea's leading steel and battery materials producer POSCO Group, plans to invest in Tanzania's second largest natural graphite mine project. The project is being developed by Australian companies to reduce dependence on Chinese graphite imports. POSCO International Corp., representing the group's integrated trading arm, has agreed to acquire a 19.9 percent stake in Black Rock Mining Ltd. for $40 million. Black Rock Mining is actively pursuing the Mahenge Graphite project in Tanzania, in which the company has an 84% stake, which is expected to contain approximately 6 million tonnes of natural graphite.

POSCO Holdings Inc. is POSCO Future M Co. The latter is the only company producing graphite anodes in South Korea. POSCO Holdings is committed to wean itself off its reliance on Chinese graphite, which is used in battery anodes for electric vehicles. The investment aligns with POSCO's broader strategy to source key battery minerals such as lithium, cobalt and nickel from other sources. POSCO's transformation has been further boosted by US plans to end tax incentives for electric vehicles equipped with batteries containing Chinese graphite from 2027. POSCO Chairman Zhang Renhua highlighted the group's commitment to enhancing the global competitiveness of key national industries including secondary battery materials, noting the company's intention to leverage its diversified business portfolio and global network to strengthen the supply chain for national security.

South Korea is LG Energy Solutions Co., SK On Co., and Samsung SDI Co. Such as the world's major electric vehicle battery manufacturers, its dependence on China's raw materials is high, of which about 90% of graphite imports from the Chinese mainland. POSCO International's investment in Black Rock Mining will enable the Group to obtain an additional 30,000 tonnes of natural graphite per year from mines in Tanzania. This investment includes participation in the second phase of the project, to which the company has already committed in May 2023, with the same number of agreements signed for a period of 25 years. The graphite is scheduled to be procured from 2026 to coincide with the planned start of operation of the mine, with an initial annual capacity of 89,000 tons, with plans to expand capacity to 347,000 tons.

The deal also allows POSCO International to sell some of the graphite from the mine, which produces not only high-purity graphite for battery anodes, but also low-purity graphite for steel, cement and auto parts, according to the KED Global report. POSCO International has acquired the rights to sell low-purity graphite worldwide, while POSCO Future M will use high-purity graphite. To diversify its graphite sources, the POSCO Group is investing in mining projects in several countries in Africa, including Mozambique and Madagascar, and is increasing production of artificial graphite in South Korea.

According to KED Global, these efforts are expected to meet the majority of POSCO Future M's projected demand for 120,000 to 200,000 tons of graphite per year by 2027. In addition, South Korea supports domestic battery material manufacturers through a 5 trillion won ($3.7 billion) fund set up by the Ministry of Trade, Industry and Energy, providing financial support such as low-interest loans to companies such as POSCO Future M.