POSCO Future M Co., South Korea’s premier battery materials manufacturer, has announced plans to produce spherical graphite domestically in a significant move to reduce its reliance on China, according to KED Global. This decision is seen as a strategic shift aimed at strengthening the electric vehicle (EV) battery supply chain and securing greater autonomy in critical material sourcing.

Following a board meeting held on Tuesday, the company revealed its intention to create a new subsidiary—tentatively named Carbon New Materials Co.—to manage spherical graphite production. The board has approved an investment of 396.1 billion won (approximately $277 million) to build the production facility. Although the location of the plant is yet to be finalized, the development marks a milestone in localizing a component that is currently entirely sourced from China.

This initiative is especially notable as POSCO Future M becomes the first Korean battery materials firm to take concrete steps toward domestic production of spherical graphite. The material plays a vital role in lithium-ion batteries as a core component of the anode—the negative electrode. POSCO Future M plans to incorporate spherical graphite into its anode production line at its Sejong facility, thus internalizing a crucial element of the battery manufacturing process.

Graphite is favored in battery applications for its exceptional energy density and thermal stability. However, natural graphite from mining operations contains impurities and irregular shapes, making it necessary to refine it into high-purity spherical graphite before it can be used in batteries. South Korea currently depends entirely on China for both natural and spherical graphite, a vulnerability that has become increasingly concerning given ongoing geopolitical tensions and the looming threat of Chinese export restrictions.

POSCO Future M’s move is viewed as both a protective measure against such geopolitical risks and a transformative step in developing a more self-reliant battery supply chain. In addition to building domestic capabilities, the company is working to diversify its upstream supply sources. In March 2024, it signed an agreement with Syrah Resources Ltd., an Australian firm operating the Balama graphite mine in Mozambique—one of the largest graphite reserves globally.

This strategic diversification also positions POSCO Future M to benefit from tax incentives available under the U.S. Inflation Reduction Act (IRA). POSCO Group is reportedly exploring further investments in overseas natural graphite resources as part of a broader effort to reduce dependence on China.

“As we source natural graphite from outside China and begin domestic production of spherical graphite, we’re building an independent and resilient anode material supply chain,” a POSCO Future M representative told KED Global. This development aligns with global efforts to create more secure, China-free supply networks for critical technologies involved in the energy transition.