POSCO to buy lithium mining rights in Argentina from Galaxy
South Korean steelmaker POSCO has inked a deal to acquire lithium mining rights in Argentina from Australia’s Galaxy Resources, in a deal worth $280 million.
The deal, said the company, will secure stable lithium supplies for its battery material manufacturing affiliate POSCO ES Materials.
The Asian firm, which has been trying to ramp up its lithium business as the global steel market suffers from oversupply and protectionist policies, also said it planned to build a lithium plant in the South American country. The facility is expected to produce 25,000 tonnes of the white metal for 20 years, starting in 2021.
Lithium, a key ingredient in the making of batteries that power electric vehicles (EVs), has seen demand soar in recent years as more people shift away from cars powered by fossil fuels.
Experts expect the need for the commodity from battery makers alone to jump 650% by 2027, while overall demand is forecast to rise more than threefold in the next nine years.
Despite bullish forecasts, lithium may have a funding problem. Banks are wary, citing everything from the industry’s poor track record on delivering earlier projects to a lack of insight into a small, opaque market. Without more investment, Bloomberg reported, supplies of the commodity could remain tight, sustaining a boom that already has seen prices triple since 2015.
In May, Galaxy announced it had agreed to sell the Korean firm a package of tenements in the Salar del Hombre Muerto (The Dead Man’s salt flat) in northern Argentina.
It said at the time it would invest the proceeds from the deal in its flagship Sal de Vida (Salt of Life) lithium and potash brine project, also located in Argentina, within an area known as the Lithium Triangle, which straddles the border with Bolivia and Chile.
POSCO has hit some legal challenges to acquire mining rights for salt lakes in South America. This has led the company to develop alternative technologies to extract lithium from lithium minerals and used batteries instead of saltwater. According to the steelmaker, it is the only company in the world capable of producing lithium from three different sources.