Posco begins derisking rare earth permanent magnet supply chain from China

Posco International, which is looking to de-risk its supply chain for rare earth permanent magnets from China, has announced that it has bagged large-scale orders through its overseas subsidiaries.

The company’s U.S. subsidiary recently won an order worth about KRW 900 billion for permanent magnets from a global automaker in North America and agreed to supply them from 2026 to 2031. The supplied permanent magnets will be mounted on the drive motors of the company's new mid- to large-sized electric vehicle models.
In addition, Posco International's German subsidiary has also signed a contract with a European premium car brand to supply permanent magnets worth approximately KRW 260 billion from 2025 to 2034.

The permanent magnets ordered by overseas subsidiaries this time will be made from raw materials procured from the United States, Australia, and Vietnam, rather than rare earth elements from China. The production of permanent magnets will be undertaken by Sunglim High-tech Industry, the only manufacturer of rare earth permanent magnets in Korea.
Rare earth permanent magnets are a type of magnet that goes into the drive motor, which is the heart of an electric vehicle. The magnetic force is several times to tens of times stronger than that of ordinary magnets, and rare earth permanent magnets are used in more than 80% of EV driving motors.

Developing a stable supply chain
According to the company, “The contract to supply permanent magnets through Posco’s overseas subsidiaries is not only a means of 'expansion of the stable mobility business through large-scale orders' but also a 'post-China supply chain' in the permanent magnet market, which accounts for more than 90% of rare earth elements from China.”

In addition to receiving the permanent magnet order, Posco International plans to expand its value chain to strengthen its position as a supplier of core components for eco-friendly vehicle drivetrains. In addition, all the parts necessary for the rotator and stator that go into the drive motor core, which is the core component of the electric vehicle drivetrain, will be packaged and supplied to domestic and global automakers.

The components that go into the rotor include the shaft that serves the axis of rotation and the permanent magnet that produces the magnetism necessary for non-rotation. The stator is the part that wraps the rotor from the outside.

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