South Korea’s Posco Holdings Inc (NYSE: PKX) (FRA: PKX) is advancing its expansion into the lithium market with two major investments aimed at securing long-term supplies for its battery materials business.
Announced early Thursday morning, the company is finalizing the acquisition of a Canadian-owned lithium project in Argentina and entering a new joint venture in Australia.
Posco’s Argentine arm, Posco Argentina SA, confirmed that its head office in Seoul has fully approved funding to acquire the Hombre Muerto North Lithium Project from Lithium South Development Corp. (CVE: LIS) (OTCMKTS: LISMF).
The USD$65 million deal involves the purchase of Lithium South’s wholly owned subsidiary, NRG Metals Argentina SA, which holds the project’s mining rights in the Hombre Muerto salt flat—one of South America’s most prolific lithium-producing regions.
Lithium South announced that Posco Argentina has scheduled the transfer of funds and expects the transaction to close soon. The company said the sale enables it to unlock the value of its Argentine assets. Posco, meanwhile, will gain direct control over a high-potential lithium brine resource, strengthening its supply chain for electric-vehicle battery production.
Additionally, Posco agreed to invest USD$765 million in a joint venture with Australian mining company Mineral Resources Ltd (ASX: MIN). The venture will hold Mineral Resources’ 50 per cent stakes in the Wodgina and Mt Marion lithium mines in Western Australia. Under the deal, Posco will acquire a 30 per cent interest in the venture. This translates into an indirect 15 per cent share in each mine.
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POSCO aims to expand downstream processing capacity
Wodgina, one of the world’s largest hard-rock lithium deposits, is operated with Albemarle Corporation (NYSE: ALB), while Mt Marion is jointly run with China’s Ganfeng Lithium. Posco will receive spodumene concentrate in proportion to its ownership stake.
Mineral Resources said the partnership builds on their collaboration through the Onslow Iron joint venture. Furthermore, it will help them meet global demand for lithium from electric-vehicle manufacturers.
Furthermore, the dual moves demonstrate Posco’s strategy to secure diversified lithium sources in both South America and Australia. The company aims to expand its downstream processing capacity and position itself as a supplier in the battery materials market.
Posco continues to attract mixed investor sentiment as it pivots from steel production toward battery materials and renewable technologies. Analysts remain divided, with CFRA maintaining a Sell rating and UBS and Morgan Stanley upgrading to Hold and Overweight, respectively. The company has improved quarterly profitability through restructuring and asset sales but still faces declining steel demand in Asia. Additionally, fluctuating prices for lithium and nickel pose ongoing risks to its earnings outlook.
Furthermore, Posco’s recent deals with Lithium South and Mineral Resources point to a long-term strategy to secure lithium supply. Consequently, analysts see upside potential over three to five years if the company successfully expands its downstream processing.
