POSCO International Corp. inked agreements totaling 1.16 trillion won ($882 million) to supply rare earth permanent magnets for electric vehicles (EVs) to the United States and Europe, marking an expansion in its electric vehicle parts sector. The move is also part of the company‘s shift away from China in both raw material sourcing and production, given China’s dominance in the global rare earth market. The ongoing U.S.-China supply chain tensions related to the U.S. Inflation Reduction Act (IRA) are expected to continue, prompting the Korean trading company to discuss additional orders with various companies.

In a statement released by POSCO International on Tuesday, the company‘s U.S. subsidiary finalized a contract worth 900 billion won to supply permanent magnets to a major automaker in North America. Talks between the two sides began in early 2023, culminating in the contract signing in March 2024 after extensive negotiations that included technical discussions and fine-tuning of details. Further information on the automaker is yet to be disclosed.

With the agreement in place, POSCO International is poised for future growth and expansion. Product development, including sample provision and customer validation, will follow and lead up to mass production, which is scheduled for the first half of 2026. The supply agreement, a testament to the company’s long-term vision, continues until 2031 and will cater to medium as well as large electric vehicle models.

Meanwhile, POSCO International also clinched a supply deal worth 260 billion won in Europe. Under this agreement, the company’s German subsidiary will provide permanent magnets to a prestigious European luxury car brand from 2025 to 2034.

These recent orders reflect the company‘s proactive approach to reducing its reliance on China, which currently produces 90 percent of rare earth raw materials, and ramping up production outside China. Following the orders, Sunglim Advanced Industrial Co., a Korean rare earth permanent magnet producer, will be responsible for the production process, which involves extraction and refining in Vietnam.

By Kim Hee-soo and Han Yubin

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