POSCO International has announced a major strategic push to build a secure, non-Chinese supply chain for rare-earth elements and permanent magnets.
This decision is fundamentally a response to growing geopolitical risks. For years, the world has relied heavily on China, which dominates roughly 90% of the permanent magnet market. However, as China began tightening its export controls on rare earths in mid-2025, companies and governments worldwide realized the vulnerability of this dependency. Securing a stable supply of these materials is now a top priority, as they are essential for electric vehicle (EV) motors, wind turbines, and advanced defense systems.
In response, the United States has launched a significant industrial policy initiative to rebuild its domestic magnet production capabilities. The U.S. Department of Defense is backing companies like MP Materials to create a complete, end-to-end supply chain by 2028. This government-led push creates a large and reliable market for rare-earth materials processed outside of China. POSCO's plan to build a joint venture in North America with ReElement Technologies is perfectly timed to meet this emerging demand.
Meanwhile, another critical piece of the puzzle is falling into place in Southeast Asia. Malaysia recently renewed the operating license for Lynas, a major non-Chinese rare-earth processor, for another 10 years. While the renewal comes with stricter environmental regulations, it signals that Malaysia remains a viable and stable hub for rare-earth processing. This provides a clear opportunity for POSCO to establish a compliant joint venture in the region, further diversifying its production base.
POSCO's strategy is comprehensive. First, it established a ₩25 billion Corporate Venture Capital (CVC) fund to invest in a domestic Korean company with separation and refining technology. Second, it's partnering with ReElement to build separation and magnet facilities in North America, directly tapping into the policy-driven demand. Third, it's planning a joint venture in Southeast Asia to secure another processing hub.
Ultimately, this is about more than just managing risk. By targeting an annual production of 3,000 tons of permanent magnets by 2028, POSCO aims to supply between one to three million EVs per year. This move positions the company not just as a steelmaker, but as a critical supplier in the future of high-tech manufacturing.
- Glossary
- Rare-Earth Elements (REEs): A group of 17 metallic elements crucial for manufacturing high-tech products like smartphones, EVs, and military hardware.
- Permanent Magnets: Magnets made from rare-earth alloys that retain their magnetic properties. They are vital components in electric motors and generators.
- CVC (Corporate Venture Capital): A type of venture capital fund created and managed by a large corporation to invest in external startup companies.