POSCO to Sell 100% Stake in P&O Chemical to OCI: Reports

POSCO Future M Co., a battery materials subsidiary of South Korea’s POSCO Holdings Inc., plans to sell its entire stake in P&O Chemical Co. to its business partner, OCI Co, according to the media reports.

A report by KED Global revealed that the boards of both companies will meet on Monday to finalize the stake sale and purchase agreement. P&O Chemical, a joint venture established in 2020 with a 51-49 split between POSCO Future M and OCI, specializes in producing high-purity hydrogen peroxide (H2O2) for semiconductor cleaning and pitch material for secondary battery anodes. Notably, P&O is Korea’s only producer of pitch.

As part of the deal, which is expected to close in the coming weeks, OCI will acquire POSCO Future M’s 51% stake in P&O Chemical for approximately 50 billion won ($37.6 million). With full ownership of P&O, OCI aims to strengthen its position in the semiconductor and battery materials sectors.

Meanwhile, POSCO Future M, formerly known as POSCO Chemical, will improve its financial standing by up to 150 billion won. P&O Chemical reported a net loss of 67.1 billion won on 41.8 billion won in sales last year, with a debt of 164.3 billion won at the end of 2023.

The decision to sell POSCO Future M’s stake was driven by POSCO Group’s broader strategy to offload non-core assets and enhance financial stability. In July, POSCO Holdings announced plans to generate 2.6 trillion won through restructuring by 2026, aiming to sell or liquidate around 120 non-core and unprofitable assets.

Under the leadership of Group Chair and CEO Chang In-hwa, who began his term in March, the company targets a market capitalization of 200 trillion won by 2030, up from its current 70 trillion won. Chang emphasized in April the need for aggressive cost-cutting measures amid global steel oversupply and the escalating US-China trade tensions while expanding into new growth areas like battery materials.

According to several media reports, POSCO Future M has been facing challenges due to a slowdown in the battery and electric vehicle markets. The company carried 4.84 trillion won in debt as of June and recorded a net loss of 11.2 billion won in the second quarter. In November, P&O Chemical completed Korea’s first pitch plant in Gongju, producing anode material coating with superior heat resistance. The company’s hydrogen peroxide is a key component for cleaning high-tech products like semiconductors. Despite current industry challenges, an industry executive told KED Global that P&O Chemical is expected to turn profitable within two to three years due to its technological edge.