Posco Future M, L&F Secure Multi-Trillion Won LFP Cathode Deals
Posco Future M secured a ₩6 trillion LFP cathode deal with Samsung SDI, while L&F agreed to a ₩1.6 trillion supply. This shift is driven by US tax rules.
South Korean Firms Expand LFP Capacity
Posco Future M, a Posco Group unit, finalised a long-term agreement last week to supply Samsung SDI with lithium iron phosphate (LFP) cathode active materials. The deal, valued at approximately 6 trillion won ($4.5 billion), covers the period from 2027 through 2032. This volume represents more than double the 190,000 tons from a previous agreement signed in August.
Weeks earlier, Posco Future M also secured a roughly 1.1 trillion won LFP supply deal with SK On for 2027 through 2029, with an option for a two-year extension. The company is converting high-nickel cathode production lines in Pohang for LFP, with mass production expected by year-end.
It also plans a new LFP cathode plant in Pohang with Chinese precursor maker CNGR, aiming for 50,000 tons annual capacity next year.
L&F Secures Key Agreements
L&F has also made significant inroads into the LFP market. Last month, the cathode producer signed a 160 billion won LFP supply agreement with SK On. This follows a 1.6 trillion won deal secured with Samsung SDI in March, covering three years from 2027.
Samsung SDI stated that L&F's cathode materials will be used in energy storage system (ESS) batteries produced at its joint venture plant with Stellantis in Indiana. L&F's LFP-focused subsidiary, L&F Plus, opened a dedicated plant in Daegu in May and began shipping trial products in July. The plant’s annual production capacity is projected to double from 30,000 to 60,000 tons by mid-next year.
US Rules Drive Supply Chain Shift
The push into LFP cathodes by South Korean firms is largely driven by growing demand for energy storage systems and stricter US tax credit rules. The US Inflation Reduction Act (IRA), enacted last year, introduced new restrictions on materials linked to "prohibited foreign entities" (PFEs).
These rules, governing Section 45X advanced manufacturing production tax credits, require battery components to meet minimum thresholds for non-PFE sourced direct material costs. For example, batteries must have at least 60% of their material costs from non-PFE suppliers in 2026 to be eligible for credits.
This threshold will rise to 65% in 2027, creating an opening for Korean companies in a market previously dominated by China.
Korean battery makers like Samsung SDI, LG Energy Solution, and SK On are expanding their North American ESS businesses, converting existing electric vehicle (EV) battery lines to LFP production. LFP batteries, while less suitable for premium EVs, offer cost efficiency, longer cycle lives, and greater thermal stability, making them ideal for large-scale ESS installations.
The rapid growth of AI data centres is intensifying the need for such systems, further boosting LFP demand. To maintain eligibility for US federal incentives, battery makers must secure non-PFE supply chains, which means increased demand for Korean-made cathode materials.
Companies will need to meet the 65% non-PFE material cost threshold in 2027, requiring continued investment in diversified sourcing.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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