(Reuters) - South Korean steelmaker POSCO on Monday said it had signed a deal to buy lithium mining rights in Argentina from Australia’s Galaxy Resources for $280 million.
POSCO said in a statement that it would also build a lithium plant in Argentina, planning to produce 25,000 tonnes of the commodity per year for 20 years starting from 2021.
Lithium, a critical ingredient for batteries used in electric vehicles, has seen growing demand in recent years as some consumers shift away from cars powered by fossil fuels.
POSCO said the move would secure stable lithium supplies for its battery material manufacturing affiliate POSCO ES Materials.
Ahead of the announcement, Galaxy had halted trading in its shares in Australia. It had agreed in May to sell the rights, for the Salar del Hombre Muerto salt flat in northern Argentina.
Galaxy said at the time that proceeds from the deal would fund the development of its flagship Sal de Vida project in South America.
However, amid potential signs of China’s battery chemical market being oversupplied, short selling of shares of lithium miners has swelled this year.
Meanwhile, POSCO entered a deal with Australia’s Pilbara Minerals Ltd in February featuring an upfront A$79.6 million ($58.24 million) equity investment in Pilbara, securing supply of chemical grade spodumene concentrate, mined for its lithium content.
($1 = 1.3669 Australian dollars)
Reporting by Aaron Saldanha in Bengaluru, Jane Chung and Hyunjoo Jin in Seoul; Editing by Richard Pullin and Joseph Radford