POSCO Group's plans for domestic production of nickel, a key raw material for secondary batteries, have been shelved, leading to observations that Korea Zinc's role in establishing a domestic secondary battery raw material supply chain will be greater. POSCO and Korea Zinc had both embarked on establishing nickel plants with production capacities ranging from 40,000 to 50,000 tons annually, but with POSCO abandoning its construction plans, only Korea Zinc remains.
Korea Zinc will have the second largest nickel sulfate production base in the world, following China, once its all-in-one nickel refinery, which began construction in November 2023, is completed. In a situation where dependence on Chinese key raw materials for batteries is high, Korea Zinc's nickel refinery is expected to play a significant role in the country's goal of self-reliance in the secondary battery supply chain.
According to the business community on the 14th, POSCO Holdings is in the process of liquidating its nickel production joint venture (POSCO CNGR Nickel Solutions) established in partnership with China's largest precursor company, CNGR Advanced Material. POSCO Holdings had set up the joint venture last year as part of its efforts to establish a supply chain for secondary battery raw materials and materials. The plant being built in the Pohang Yeongilman 4 Industrial Complex was planned to produce up to 50,000 tons of high-purity nickel annually. Although a groundbreaking ceremony was held in May of last year, the decision was made to pull out about nine months later. This is observed as a move to readjust investments due to the prolonged slowdown in secondary battery demand resulting from the contraction of the electric vehicle market.
Korea Zinc is currently constructing an all-in-one nickel refinery at the Onsan Industrial Complex in Ulsan through its nickel sulfate production subsidiary, Chemco. The facility can produce 42,600 tons of nickel sulfate annually. Nickel sulfate is an inorganic compound created by dissolving nickel in sulfuric acid and evaporating it, mainly used as a raw material for precursors needed for ternary battery cathodes.
The difference with the all-in-one nickel refinery compared to conventional nickel refineries is that it can produce nickel sulfate from various types of nickel-containing raw materials (intermediates) such as nickel matte, mixed hydroxide precipitate (MHP), black mass (processed waste batteries), and concentrate all within one facility. Foreign nickel refineries usually process only one type of raw material to produce nickel.
Korea Zinc plans to invest approximately 500 billion won in the construction of its all-in-one nickel refinery. It aims to begin commercial production by the end of next year. Choi Yoon-beom, chairman of Korea Zinc, visited the construction site on the 31st of last month to check on the progress.
Chemco currently has a production capacity of about 90,000 tons of nickel sulfate. After the completion of the all-in-one nickel refinery, combining Chemco's current production capacity will give Korea Zinc more than 130,000 tons of nickel sulfate production capacity, making it one of the largest in the world, excluding China.
Korea Zinc is expected to receive a tax credit for 15% of its investment in the all-in-one nickel refinery. This is because the government is promoting a plan that designates nickel sulfate, cobalt sulfate, manganese sulfate, and lithium hydroxide production technologies as national strategic technologies and provides a 15% tax credit on the related facility investment. The government envisions fostering a domestic supply chain ecosystem to reduce dependence on overseas sources for secondary battery raw materials and materials.
A source in the secondary battery industry said, "In a situation where most secondary battery raw materials and precursors are imported from China, domestic production of key raw materials like nickel or lithium is essential for supply chain stability."