Posco Future M said on Wednesday it agreed with a South Korean battery company on a large-scale, long-term supply of cathode material for LFP batteries, which use lithium, phosphate and iron as main raw materials. The terms call for supplying more than 190,000 tons over six years from next year through 2032. The two sides plan to sign a formal contract in the third quarter after discussing detailed terms.

LFP batteries have lower output than ternary batteries such as NCM, which uses nickel, cobalt and manganese, or NCA, which uses nickel, cobalt and aluminium. They are cheaper and have a longer lifespan. Demand for LFP batteries for energy storage systems is rising as power demand surges with data centre expansion for artificial intelligence, driving a need for stable power supply. In the electric vehicle market, LFP battery adoption is also increasing, centred on entry-level models.

The company stressed it has already completed facility conversion to meet the supply timing. Posco Future M recently converted part of a high-nickel cathode material production line at its Pohang plant into a production line for LFP cathode material. A prototype certification process for the customer is under way. It plans to begin mass-production supply from the end of this year. It is also in the final stages of a supply contract for LFP cathode material with another major customer, and plans to expand production capacity in line with additional orders.

It is also working to improve its cost structure. It applies a new process that uses by-products such as iron oxide generated from steelmaking processes and lithium secured from Argentina salt lakes, based on group-level cooperation within Posco. The company said it plans to produce and supply LFP cathode material with improved cost competitiveness. In May, CNP New Materials Technology, a joint venture between Pino and CNGR, broke ground on an LFP cathode material plant at the Pohang Yeongil Bay 4 General Industrial Complex. It targets mass production in 2027 and will increase production capacity in stages to a maximum of 50,000 tons.

It is also continuing talks on supplying cathode and anode materials with global battery and automaker companies, citing a supply chain and technological capability that can respond to trade regulations in each country. In March, it signed a long-term supply contract for artificial graphite anode material worth 1 trillion won with a global automaker. The company also said it is pursuing the construction of an artificial graphite anode material plant in Vietnam with an investment of about 357.0 billion won, the company said.