This article was displayed on the ChosunBiz MoneyMove (MM) site at 3:55 p.m. on May 21, 2026.
POSCO FUTURE M will dispose of all its equity investment in a Chinese artificial graphite anode materials company. The move is seen as an effort to strengthen financial soundness by recouping investment funds and to diversify its supply chain amid the electric vehicle "chasm" (a temporary slowdown in demand) and tighter U.S. foreign entity of concern (FEOC) regulations.
According to the investment banking (IB) industry on the 21st, POSCO FUTURE M decided to sell its entire remaining 8.30% equity in the Chinese artificial graphite anode materials company "Inner Mongolia Sinuo New Material Technology Co., Ltd." This follows a shareholders' agreement previously signed by the two sides, under which Guomin Technology, the largest shareholder with call option rights, exercised its purchase right, leading to the disposal.
Inner Mongolia Sinuo is a producer of artificial graphite anode materials in China. POSCO FUTURE M (then POSCO Chemical) participated in a paid-in capital increase of Inner Mongolia Sinuo in Nov. 2021 and acquired 15% equity. The strategic investment aimed to preemptively secure a supply chain for artificial graphite anodes in response to the rapidly growing electric vehicle battery market at the time, and to obtain sales rights for domestic customers and the right to participate on the board of directors.
But market conditions changed rapidly thereafter. As the U.S. Inflation Reduction Act (IRA) and FEOC regulations took full effect, reliance on Chinese battery materials emerged as a risk factor, and a slowdown in EV demand further cooled global anode market conditions quickly. In fact, as Chinese anode makers faced lower operating rates and intensified price competition, Korean battery materials corporations have been accelerating supply chain restructuring.
The contract structure between the two sides also changed in the process. The initial contract included a call option clause allowing the largest shareholder, Guomin Technology, to buy back POSCO FUTURE M's equity at the original investment price if POSCO FUTURE M failed to achieve a total of 1,000 tons of mandatory purchase volume for three years after the capital increase. If that condition materialized, POSCO FUTURE M would face a reduction in equity ratio and could also lose its right to appoint board members.
Subsequently, POSCO FUTURE M signed a supplemental agreement with Guomin Technology's side to readjust the structure for recovering its investment. In this process, it first exercised a put option on part of its equity, and POSCO FUTURE M's stake in Inner Mongolia Sinuo fell from 10.11% to 8.30%.
The latest equity sale is seen as the result of aligned interests. If POSCO FUTURE M exercised the put option, the largest shareholder's side would have to pay the exercise price plus simple interest of 4% per year, but under the supplemental agreement, Guomin Technology's side could exercise the call option regardless of whether the put option was exercised. The industry views that POSCO FUTURE M also had an incentive to maintain financial soundness, and that the two sides reached an agreement to dispose of the remaining equity through consultations.
The market views this transaction as an extension of POSCO FUTURE M's strategy to diversify its supply chain. POSCO FUTURE M has recently been focusing on reorganizing a North America-centered supply chain and building a domestic artificial graphite production system. The company is also pushing to establish a production base for artificial graphite anode materials in Vietnam to reduce its reliance on China.
An industry official said, "In the past, simply securing a production base in China was a competitive edge, but now responding to FEOC regulations and building a de-China supply chain have become core tasks," and added, "From POSCO FUTURE M's standpoint, it would have been a more realistic choice to dispose of its local investment equity in China rather than hold it long-term."