Honda Motors (TYO: 7267) and POSCO Future M Co., Ltd., a subsidiary of South Korean multinational steel company POSCO Holdings (NYSE: PKX) (LON: PIDD) (KRX: 005490), are seeking to establish a new Canadian joint venture (JV) to produce battery cathode materials for electric vehicles to service the North American market.
The two companies signed a preliminary agreement for the proposed JV, accompanied by a CAD$15 billion investment to help produce an EV plant in Alliston, Ontario, with a production capacity of 240,000 units per year. The companies also anticipate operations to begin in 2028.
Furthermore, having established itself as a supplier of battery materials, Posco counts battery makers such as Samsung SDI, LG Energy Solution, and Ultium Cells among its key customers.
Posco and Honda initiated discussions a year ago and signed a memorandum of understanding (MoU) earlier this week ensuring the companies will meet in the coming months to iron out the details. The aim is to sign a formal joint venture agreement before the end of 2024.
Under this JV, Posco will produce cathode materials that Honda will use in vehicles manufactured in Canada and the U.S.
Cathode materials, typically a blend of minerals like lithium, cobalt, nickel, and manganese, significantly influence the cost of BEV battery cells. Additionally, the joint venture aims to provide Honda with a stable supply of high-quality cathode materials for its North American EV batteries.
The basic agreement between the two companies aims to strengthen their business by ensuring a stable supply of high-quality cathode materials, essential for batteries in electric vehicles.
Read more: Lithium South expands well installation program at Hombre Muerto North
Read more: Lithium South explores alternative production methods at Hombre Muerto North
POSCO has been building its EV portion
POSCO has been busy of late building up its position in the EV sector.
Recently, its Argentina lithium producing subsidiary and Canadian lithium junior, Lithium South Development Corporation (TSXV: LIS) (OTCQB: LISMF) (Frankfurt: OGPQ) entered into a cooperative development agreement to jointly develop the Hombre North Lithium Project (HMN Li Project) in the Salta Province of Argentina.
The project encompasses five key claim blocks spanning 3,287 hectares, including Alba Sabrina at 2,089 hectares, Natalia Maria at 115 hectares, Viamonte/Norma Edith with 595 contiguous hectares, Gaston Enrique at 55 hectares, and Tramo at 383 hectares.
To access the potential brine in this area without the delays, costs, and uncertainties of legal action, Lithium South and POSCO have decided to collaboratively develop the Norma Edith and Viamonte claim blocks and to equally share the brine produced from these blocks on a 50/50 basis.
Additionally, Lithium South released its Preliminary Economic Assessment (PEA Report) on its HMN Li Project on Tuesday.
The PEA Report supports Lithium South’s development plans to construct a lithium carbonate plant with an annual capacity of 15,600 tonnes on the project. The project will also use a conventional extraction and recovery process involving the solar evaporation of well brine, magnesium removal with slaked lime, and lithium carbonate precipitation using soda ash, a proven industrial method for lithium production.
The financial model indicates a Net Present Value after tax of US$938 million, an after-tax Internal Rate of Return of 31.6 percent, and a payback period of 2.5 years.
Lithium South Development Corporation is a sponsor of Mugglehead news coverage
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