South Korean steelmaker Posco has joined the so-called ‘brine rush’ in heading for Argentina’s lithium-rich salt deposits where it plans to boost its investment from a first estimate of $US800 million to at least $US4 billion.
The company – which earlier this year snapped up Australian oil and gas minnow Senex with Gine Rinehart’s private company – will invest in a new brine-based lithium mining project in Argentina.
This will be separate and the different route to lithium that it has with the processing deal with Pilbara Minerals to take WA spodumene and convert it in South Korea,
The Argentinian project will see Posco invest in a project at a salt flat called Salar de Hombre Muerto, located in the border between the northern Salta and Catamarca provinces.
Posco expects to initially produce 25,000 tonnes of lithium hydroxide a year – a vital, high-demand lithium product for battery makers – eventually reaching 100,000 tonnes once the venture is completed.
Export value from the project is seen totaling $US260 million per year over the next 30 years, according to a statement from Argentinian President Alberto Fernandez’s office earlier this week.
A spokesman for Posco confirmed the figures in a statement to Reuters.
Posco already has a lithium processing venture with Pilbara Minerals to develop a lithium hydroxide conversion facility in South Korea.
The facility in Gwangyang is expected to cost up to $US750 million. Pilbara will own an initial 18% stake in the plant with an option to increase that to 30%.
Under the agreement, Pilbara will supply 315,000 tonnes a year of chemical grade spodumene concentrate, the mineral that lithium is extracted from, to the facility.
The Argentinian play is a hedge for Posco in lithium production via the longer established brine-based method.
The areas are part of the so-called “lithium triangle,” which also includes neighbouring Bolivia and Chile, home to one of the world’s largest lithium reserves.
Posco was initially expected to invest $US830 million in the venture, but changes in the original project led it to increase the amount.
This is the biggest spend of a series of projects the iron and steel giant (which is one of the largest non-Chinese customers for Australian iron ore) has underway to diversify out of fossil fuel reliance.
Last week it started working constructing a plant southeast of Seoul that will produce sold-state electrolyte (SSE), a key component in solid-state batteries. SSE is one of the key components for future electric vehicle (EV) battery production, as it enables an EV to run a longer distance.
The Senex takeover is about moving towards hydrogen production eventually. Posco wants to move towards so-called Blue Hydrogen to be made from Senex’s Queensland gas.
Posco will eventually own 50.1% of Senex and Rinehart’s private company will buy a 49.9% in a deal that will occur after the takeover which is about to wrap up.
Posco owns 12.5% of Rinehart’s 55 million tonnes a year Roy Hill iron ore mine in WA’s Pilbara and is the major customer.
For Posco though there’s a handy extra benefit from Senex and its Australian gas fields – they are not based in Myanmar where the steel maker presently sources much of its gas from the producing Shwe gas field.
Posco has come under considerable pressure following the country’s military coup and has already halted other business interests in Myanmar.
Thanks to the global steel boom, Posco is rolling in cash. Total revenue for 2021 (to the end of December) jumped more than 32% to over $US62 billion and net profit of $US5.19 billion which was up more than 400% from 2020’s Covid-depressed result.
It is looking for 2022 revenue and earnings to be around the same level at 2021’s but that was before the surge in coal, oil and gas prices in the wake of the Russian invasion of Ukraine.
