POSCO International Corp., an affiliate of South Korea’s leading steel conglomerate POSCO Holdings Inc., has clinched substantial contracts totaling nearly 1.2 trillion won ($9 billion) to supply permanent magnets to major car manufacturers in North America and Europe. These deals mark a significant step in the development of a global supply chain for permanent magnets that reduces dependence on Chinese-sourced rare earth minerals.
The agreements include a 900 billion won contract with a North American carmaker to provide permanent magnets from 2026 to 2031, essential for the drive motors in mid to large-sized electric vehicles. Additionally, POSCO International’s German subsidiary has secured a 260 billion won deal with a premium European automotive brand, spanning from 2025 to 2034. The company plans to source the rare earth minerals needed for these magnets from the United States, Australia, and Vietnam, aiming to shift the industry away from its heavy reliance on Chinese resources.
This strategic move aligns with POSCO International’s commitment to enhancing its green mobility driving system sector, identified as a key growth area within the POSCO Group’s portfolio. The recent contracts are expected to accelerate the company’s efforts to establish a more diversified and resilient permanent magnet supply chain on a global scale.
Star Group Industrial Co., Korea’s exclusive manufacturer of rare earth permanent magnets, has been tapped to produce the magnets for these deals. This collaboration is bolstered by an agreement last year between Star Group and POSCO International to construct a permanent magnet manufacturing facility in the United States.
The significance of these magnets extends beyond mere components; they are crucial in the functionality of electric vehicles (EVs), particularly in the drive motors that power the vehicle’s movement. The superiority of rare earth permanent magnets in strength and efficiency is why they are preferred in over 80% of EV driving motors, despite the current market dominance by Chinese manufacturers.
This venture represents a concerted effort to counterbalance China’s stronghold on the rare earth permanent magnet market and to foster a more sustainable and diversified supply chain that can support the burgeoning EV industry worldwide. The initiative by POSCO International and Star Group reflects a forward-looking strategy to capitalize on the growing demand for green mobility solutions while ensuring a stable and secure supply of critical materials.
