• EV Tech Insider
  • Posts
  • POSCO establishes ‘China Excluded’ supply chain for rare earth magnets

POSCO establishes ‘China Excluded’ supply chain for rare earth magnets

March 18, 2024

POSCO INTERNATIONAL has secured substantial orders through its overseas subsidiaries to build a supply chain for rare earth magnets that does not rely on Chinese sources.

The U.S. subsidiary of POSCO INTERNATIONAL has recently secured an order worth approximately KRW 900 billion from a North American global automaker. The order, which will run from 2026 to 2031, is for the supply of permanent magnets to be used in the traction motors of the client’s new medium and large-sized electric vehicle (EV) models.

In addition, the German subsidiary of POSCO INTERNATIONAL has signed a contract to supply permanent magnets valued at approximately KRW 260 billion to a premium European automaker from 2025 to 2034. The permanent magnets involved in these contracts will be sourced from the U.S., Australia, and Vietnam, avoiding the use of rare earths from China. The production of these permanent magnets will be carried out by STAR GROUP IND. CO., LTD., the sole manufacturer of rare earth permanent magnets in Korea.

Rare earth permanent magnets are a crucial component for the traction motor, which is the heart of an EV. They are used in over 80% of EV traction motors due to their magnetic force being several times or up to dozens of times stronger than that of ordinary magnets.

These orders secured by the overseas subsidiaries of POSCO INTERNATIONAL are significant for the company. They are seen as a milestone in expanding its stable mobility business through large-scale orders and establishing a supply chain for the permanent magnet market that excludes China, a market where Chinese rare earths market share is at least 90 percent.

In addition to these permanent magnet orders, the company plans to expand its value chain to strengthen its position as a core part manufacturer for the drive control system of eco-friendly vehicles. The company will also package and supply all the parts required for the rotor and stator of the traction motor core, key components of the electric vehicle drive control system, to both domestic and international automakers.

A POSCO INTERNATIONAL official stated, “These orders mark a significant milestone as we enter the global market by collaborating with a domestic company in the rare earth permanent magnet market, which is largely monopolized by China. We are currently in discussions with several automakers and traction motor manufacturers for additional orders and are optimistic about future business expansion.”