Posco Future M has locked in a deal to source lithium hydroxide from within its corporate structure, in a move that avoids problems stemming from US Foreign Entity of Concern restrictions.

The company said Friday it had signed an agreement to purchase 20,000 tons of lithium hydroxide from Posco Pilbara Lithium Solution, its affiliate, enough to produce cathode materials for around 460,000 electric vehicles. Cathode materials are a key component in lithium-ion batteries, which power most EVs.

This lithium hydroxide comes from Australian mines via Posco Pilbara Lithium Solution’s Gwangyang plant in South Korea. The plant, co-owned by Posco Holdings and Australia’s Pilbara Minerals, recently doubled its capacity to produce 43,000 tons annually.

This supply chain avoids reliance on regions like China, which is classified as an FEOC under US trade rules. Starting in 2025, companies using minerals from FEOC-listed nations will lose access to US tax credits under the Inflation Reduction Act.

With US EV demand rising, Posco Future M plans to gradually increase purchases from its affiliate. The company is also building a robust internal supply network, tapping into lithium from Argentina, nickel from Posco's SNNC unit, and recycled materials from Posco HY Clean Metal.