UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15D-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of December, 2023

Commission File Number: 1-13368

 

 

POSCO HOLDINGS INC.

(Translation of registrant’s name into English)

 

 

POSCO Center, 440 Teheran-ro, Gangnam-gu, Seoul, Korea, 06194

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒                         Form 40-F  ☐

 

 

 

POSCO HOLDINGS INC. is furnishing under cover of Form 6-K:

Exhibit 99.1: An English-language translated documents of POSCO HOLDINGS INC.’s 3Q Quarterly Report for the year 2023.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

				POSCO HOLDINGS INC.
				(Registrant)
Date: December 7, 2023		By		/s/ Han, Young-Ah
				(Signature)
				Name:  Han, Young-Ah
				Title:    Senior Vice President

Exhibit 99.1

 

 

QUARTERLY REPORT

(From January 1, 2023 to September 30, 2023)

THIS IS AN ENGLISH TRANSLATION OF THE QUARTERLY REPORT ORIGINALLY PREPARED IN THE KOREAN LANGUAGE (IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SERVICES COMMISSION). THIS ENGLISH TRANSLATION IS NOT OFFICIAL AND IS PROVIDED FOR INFORMATION PURPOSES ONLY.

UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON BOTH CONSOLIDATED AND NON-CONSOLIDATED BASIS IN ACCORDANCE WITH THE KOREAN-INTERNATIONAL FINANCIAL REPORTING STANDARDS (K-IFRS) WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES.

QUARTERLY REPORT

(From January 1, 2023 to September 30, 2023)

 

To:	Korean Financial Services Commission and Korea Exchange

 

/s/ Jeong, Ki-Seop

Jeong, Ki-Seop

President and Representative Director

POSCO HOLDINGS INC.

6261 Donghaean-ro, Pohang-si, Nam-gu, Gyungsangbuk-do, Korea

Telephone: +82-54-220-0114

 

/s/ Han, Young-Ah

Han, Young-Ah

Head of IR team, Senior Vice President

POSCO HOLDINGS INC.

6261 Donghaean-ro, Pohang-si, Nam-gu, Gyungsangbuk-do, Korea

Telephone: +82-054-220-0114

 

2

TABLE OF CONTENTS

 

I.		Overview		4
II.		Business		7
III.		Financial Statements		38

 

Attachment: Independent auditors’ review reports on consolidated and separate financial statements

 

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I. OVERVIEW

1. Company Overview

POSCO HOLDINGS INC. (the “Company”, Former POSCO)¹⁾

1) Change of the company name : POSCO (the “Company”) approved the vertical Spin-off plan at the Extraordinary General Meeting of Shareholders as proposed on January 28, 2022 and therefore, the name of the company has changed from ‘POSCO’ to ‘POSCO HODLINGS INC.’ as of March 2, 2022.

2. Business Organization

A. Highlights of the Company’s Business Organization

 

(1)

Name of the Enterprise Group : POSCO HODLINGS INC.

 

(2)

Location of the Headquarters : 6261 Donghaean-ro (Goedong-dong), Nam-gu, Pohang-si, Gyeongsangbuk-do, Korea

 

(3)

Summary of consolidated subsidiaries

 

																		(Number of companies)
		Number of consolidated subsidiaries																Number of major subsidiaries
		Jan 1, 2023				Increase				Decrease				September 30, 2023
Listed			6				—				—				6				6
Unlisted			174				12				4				182				80
Total			180				12				4				188				86

 

*	The number of consolidated companies above does not include POSCO HOLDINGS

*	Among listed corporations, there is one overseas corporation

(5 domestic corporations and 1 overseas corporation).

*

Newly included : QSONE Co.,Ltd., POSCO PS Tech, POSCO PR Tech, POSCO PH Solution, POSCO GYS Tech, POSCO GYR Tech, POSCO GY Solution, PT AGPA REFINERY COMPLEX        , Port Hedland Green Steel Pty Ltd, POSCO MOBILITY SOLUTION POLAND Sp. z o.o., PCC Facilities Component Fund, PT POSCO INTERNATIONAL ENP INDONESIA

*	Excluded subsidiaries : POSCO Energy, POS-CD PTY LTD, POSCO ICT BRASIL, PGSF, L.P.

 

4

(4)

Major Shareholders of POSCO HOLDINGS INC.

 

(a)

Since January 30, 2007, National Pension Service holds the largest number of common shares of POSCO HOLDINGS INC.

 

(As of September 30, 2023)

Major Shareholder

Share type

Dec 31, 2022

September 30, 2023

Number of Shares owned

Percentage of ownership (%)

Number of Shares owned

Percentage of ownership (%)

National Pension Service

Common stock

7,706,725

9.11

6,135,482

7.25

 

*	The percentage of ownership is based on the total number of issued shares, and there is no ownership of shares by related parties.

 

(b)

For further reference, please refer to the public disclosures of changes in common shares of the largest shareholder on Financial Supervisory Service website (http://dart.fss.or.kr)

3. Other Information Regarding Shares

A. Total Number of Shares

 

		(As of September 30, 2023)
Authorized Shares		Issued Shares
200,000,000		84,571,230

 

Currency of the Republic of Korea is Korean Won (“KRW”).

Par Value: KRW 5,000 per share

B. Treasury Stock Holding and Cancellation

(As of September 30, 2023)

 

Method of Purchase		Type		Beginning Balance				Increased				Decreased				Cancelled				Ending Balance
Direct		Common Stock			5,406,179				—				27,030				—				5,379,149
Trust Contract					3,315,874				—				—				—				3,315,874
Total					8,722,053				—				27,030				—				8,695,023

 

*	The number of treasury stock has decreased from 8,722,053 to 8,695,023 due to provision of stock grant to the executive officers of POSCO Holdings and subsidiaries

 

5

*

Aforementioned number of treasury stocks includes 3,211,795 treasury stocks which are subject to the exchange of exchangeable bonds issued by the company on September 1, 2021. The treasury stock subject to this exchange is finalized at the time the exchange right is exercised and is currently deposited with the Korea Securities Depository.

4. Earnings and Dividends

 

						(In millions of KRW)
		2023.3Q				2022				2021
(Consolidated) Profit*			1,904,353				3,144,087				6,617,239
(Separate) Profit			885,431				-467,852				5,181,227
Earnings per Share (Consolidated, KRW)			25,101				41,456				87,330
Cash Dividend Paid			569,072				910,190				1,285,635
Pay-out Ratio (Consolidated,%)			29.9				28.9				19.4
Dividend per Share (KRW)			7,500				12,000				17,000
Dividend Yield (%)			1.3				4.1				6.0

 

*	(Consolidated) Profit : Profit attributable to owners of the controlling company

Notice of change as of the reporting date

On November 3, 2023 at the Board of Directors meeting, POSCO HOLDINGS INC. resolved to pay cash dividend of the 3^rd quarter for the fiscal year 2023 as follows:

 

Cash Dividend per Share (KRW)		2,500
Dividend Yield (%)		0.4
Record Date		September 30, 2023
Provisional Dividend Payment Date		November 23, 2023
Total Cash Dividend Amount (KRW)		189,690,517,500

 

6

II. BUSINESS

1. Overview

A. Classification of Business

We classify our business into six segments:

Steel segment, Green Infrastructure (Trading segment), Green Infrastructure (Construction segment),

Green Infrastructure (Logistics and etc. segment), Green Materials and Energy, and Others.

B. Summary of Financial Status of Segment

 

 

																		(In millions of KRW)
Business Segment		2023.3Q								2022								2021
		Sales				Operating Income (Loss)				Sales				Operating Income (Loss)				Sales				Operating Income (Loss)
Steel			48,119,360				2,211,116				70,649,647				3,236,220				63,548,935				8,365,445
Green Infrastructure (Trading)			32,621,768				938,816				49,589,760				872,279				45,290,449				619,675
Green Infrastructure (Construction)			7,472,996				166,399				8,885,491				293,344				7,412,514				428,669
Green Infrastructure (Logistics and etc.)			2,802,565				135,732				7,425,508				377,919				2,914,400				195,474
Green Materials and Energy			3,668,319				7,806				3,388,760				143,452				2,089,162				112,641
Others			1,346,963				1,034,184				1,169,536				843,682				1,784,321				59,252
Total			96,031,971				4,494,053				141,108,702				5,766,896				123,039,781				9,781,156

 

*	It is based on aggregated basis including internal transactions among affiliates .

*	Since POSCO Energy has been merged into POSCO International as of January 2023, the performance of POSCO Energy prior to the merger has been included into Green Infrastructure (Logistics and etc.).

 

7

2. Business Status of Segments

A. Steel

There are 83 consolidated companies in the steel segment, including POSCO and POSCO Steeleon, and overseas companies including PT.Krakatau POSCO in Indonesia, POSCO (Zhangjiagang) Stainless Steel Co., Ltd. in China and overseas processing centers.

∎ POSCO

(1) Summary of Business

POSCO produces steel materials such as hot rolled, cold rolled and stainless steel at Pohang Steelworks and Gwangyang Steelworks which is the largest steel mill in the world.

The steel industry is a key industry that has taken pivotal roles in the national economic development since the 1970s. Steel is used as a basic material in various manufacturing fields such as automobiles, shipbuilding, home appliances, and construction, and has a close connection with the front industry due to its characteristics.

Despite of expected demand increase from reopening in the first half of 2023, the demand turned weaker after 3rd quarter due to prolonged global economic uncertainty so that global crude steel production from January to September 2023 recorded 1,406 million tons which is similar to the same period last year

Global Crude Steel Production

 

										(Millions of Tons, %)
Crude Steel Production		2020				2021				2022				2023.3Q
Global			1,864				1,951				1,832				1,406
Korea (Ratio)			67 (3.6	%)			71 (3.6	%)			66 (3.6	%)			50 (3.6	%)

 

Source: World Steel Association (www.worldsteel.org)

The steel industry is affected by the business cycle and the ups and downs of the demand industry.

Therefore, steel demand is not only related to trend of market economy, but also to situation of demand industries like shipbuilding, automobiles, home appliances, constructions and etc.

The steel industry is a capital and technology-intensive industry that requires enormous initial investments. Steel companies are focusing on reducing production costs and securing price competitiveness.

POSCO aims to maintain its competitive edge in the domestic market by strengthening long-term partnerships with key and leading customers and responding to global protectionism based on comprehensive response systems such as marketing, R&D, technology services, and production. In addition, we are expanding steel processing centers to meet the needs of global front industries such as automobiles, shipbuilding, home appliances, and construction, while strengthening our global sales network by operating steel production bases Indonesia(upstream) and India(cold-rolling mills).

The company plans to upgrade its customer and market structure by expanding its high value-added World Top Premium products, while responding to customers’ diverse needs by launching an eco-friendly product line Greenate and developing hydrogen-reduced steel HyREX technology in line with the global low-carbon trend.

In the steel industry, automobiles, shipbuilding, and construction are the main demand industries, and steel products are used as raw materials for these demand industries. In terms of sales, the proportion of domestic

 

8

sale is 55% of total sales and export sales are around 45%, and by export region, the proportion of Southeast Asia, Japan, Europe and China is high. POSCO maintains order based production and sales system, and to secure stable sales, the proportion of direct sales to customers in domestic sales is maintained at about 60%.

POSCO continues to strive to strengthen its competitiveness in the midst of rapidly changing business environments such as the transition to a low-carbon eco-friendly era, accelerating technological innovation, and strengthening ESG management. The company’s competitive advantages include followings:

First, POSCO is promoting great transformation from current steelmaking process to a low-carbon, eco-friendly process.

Second, POSCO will complete establishing ‘intelligent Smart mill’

Third, POSCO will upgrade portfolio for ‘premium product competitiveness’. In order to proactively respond to the increasing customer demand of eco-friendly products and expand the development of high-end products and Green transition solutions, POSCO launched three green steel brands that are : INNOVILT, e Autopos, and Greenable. In November 2022, Greenate which is a masterbrand representing POSCO’s “net-zero carbon 2050 was newly launched. Greenate is a brand that encompasses all departmental efforts and products for producing low-carbon, eco-friendly steel in the process of converting to eco-friendly EV battery materials and hydrogen-reduced steel, as well as the three major eco-friendly steel brands represented by e Autopos, INNOVILT, and Greenable. POSCO Group plans to systematically communicate its efforts and achievements to achieve 2050 carbon neutrality internally and externally with Greenate. In addition, in June 2023, the nation’s first carbon-reduced distributed steel product “Greenate certified steel” was launched, and we plans to launch Greenate carbon reduced steel(EAF Type) in 2026, which combines steel produced in furnace and electric furnace steel to reduce furnace usage.

Lastly, POSCO has been strengthening ESG oriented management. POSCO, As an unlisted company, has no obligation to establish special committee under the board of directors, but it has not only established an ESG committee to strengthen its external communication with interested parties but also established an audit committee to support ESG governance.

(2) Market Share

 

										(Millions of Tons, %)
Category		2023.3Q								2022
		Production				Market share				Production				Market share
Crude Steel Production			50.4				100	%			65.9				100	%
POSCO			26.7				52.9	%			34.2				51.9	%
Others			23.7				47.1	%			31.7				48.1	%

 

Source: World Steel Association (www.worldsteel.org)

∎ POSCO STEELEON

POSCO Steeleon provides differentiated value through technology development and new market development with design/solution provision in both domestic and overseas surface treatment steel market. In addition, POSCO Steeleon is strengthening sales system of WTP (World Top Premium) products through joint marketing

 

9

with POSCO. In line with POSCO Group’s strategy that strengthens the sales base for high-end steel materials for construction use, POSCO Steeleon is striving to strengthen its competitiveness in the high-end construction/exterior materials through research and development based on customers.

∎ POSCO M-TECH

(1) Summary of Business

POSCO M-TECH is a specialized supplier of steel products packaging and steel supplementary materials such as aluminum deoxidizers which is needed to remove oversaturated oxygen in steelmaking process. In case of steel products packaging, POSCO M-TECH continuously develops packaging machines and materials. The cost competitiveness of its steel packaging business has strengthened by reducing packaging materials and developing technology to improve packaging quality. The steel packaging business has enhanced cost competitiveness by reducing packaging materials and improving packaging quality, while the packaging equipment business has focused on developing automation equipment for packaging.

(2) Business Areas

 

Business Areas		Major Goods and Services		Major Customer
Steel raw material business		Aluminum deoxidizer pellets, mini pellets, ingots and etc.		POSCO
Steel product packaging business		Steel packaging service, maintenance of packaging facilities and etc.
Engineering business		Steel Packaging Engineering, Mechanical Equipment and etc.
Consignment operation business		Ferromanangan factory and etc.

(3) Market Share

(Tons)

 

Category		2023.3Q								2022								2021
		Sales Volume				Market share				Sales Volume				Market share				Sales Volume				Market share
POSCO M-TECH			23,202				39.6	%			31,245				44.0	%			34,846				49.0	%
PJ Metal			34,560				60.4	%			39,700				56.0	%			36,257				51.0	%
Total			57,762				100.0	%			70,945				100.0	%			71,103				100.0	%

 

It is difficult to calculate exact market share of Aluminum deoxidizers as total production and sales volume of the domestic market are not counted.

B. Green Infrastructure [Trading segment]

There are 39 subsidiaries in trading segment including POSCO International, 26 subsidiaries in construction segment including POSCO E&C and 12 subsidiaries of logistics and etc. segment including POSCO Flow.

 

10

∎ POSCO INTERNATIONAL

(1) Market Share

 

						(Millions of US Dollars)
Category		2023.3Q				2022.3Q				Growth Rate
All Trading Companies in Korea			464,278				524,536				-11.49	%
POSCO International Corp.			7,022				7,752				-9.42	%

 

Source: Korea International Trade Association (www.kita.net)

(2) Summary of Businesses

While focusing on trading which is its main business, POSCO International is engaged in resource development, production processing, and infrastructure development and operation.

POSCO International and its consolidated subsidiaries engage in three major businesses: trading, energy and investment(food resources, motor core for EV, mineral resource development and etc). In addition, POSCO International maintains a global network of over 80 subsidiaries and branches in major overseas regions.

[Global Business Sector]

 

-

Trading business : POSCO International has not only been securing stable supply line in steel business but also been actively developing and expanding new businesses such as secondary battery business, agro-commodities, and industrial materials based on the know-how accumulated over a long period of time in the traditional trading business and through its vast overseas networks. POSCO International is also carrying out agro-commodities trading and food resource development projects in order to secure sustainable future food resources. As a result, the company has diversified its sales outlets in Korea, China, Southeast Asia, and MENA, while expanding food import volume.

 

-

Motor core business: Together with POSCO Mobility Solution which is a subsidiary of POSCO International, POSCO International started engaging into motor core business for EV. It is expected to expand motor core production to 7 million by 2030.

 

-

Palm farm in Indonesia: POSCO International is developing a palm plantation in Indonesia and gradually expanding sales by establishing a local palm oil production system. In December 2022, another CPO (Crude Palm Oil) mill, enabling the production of approximately 250,000 tons of CPO annually is newly established, and the company is pursuing environmentally friendly palm farming through RSPO certification.

 

-

Grain Terminal in Ukraine : In 2019, POSCO International acquired a 75% stake in a Ukrainian grain export terminal capable of shipping 2.5 million tons annually, making us the first Korean company to enter the Ukrainian grain terminal business. Although operations have been suspended due to the Russia-Ukraine conflict, POSCO International is gradually resuming operations as the situation gets better.

 

11

-

Textile Business in Uzbekistan

POSCO International Textile in Uzbekistan has 4 manufacturing factories located in the city of Fergana, the villages of Tashlak, Kumtepa and a branch in the city of Bukhara. In order to secure raw cotton procurement and enhance the competitiveness of the cotton business, the raw cotton cluster project is planned to continue to be expanded.

 

-

Online Steel Sales Business

POSCO International has established eSTEEL4U which is an online platform for steel sales in April 2022. The company will lead the digital transformation of steel sales by strengthening the cooperation system with partners to improve customer service satisfaction and continuously expanding online sales volume.

 

-

Ambatovy Nickel Mine Project : POSCO International has been participating in the Ambatovy Nickel Mine Project, the world’s third-largest nickel mine in the mineral resource development project with a 3.9% stake. In addition, POSCO International is searching for new opportunities in EV battery material business.

 

-

Australian Narrabri bituminous coal mining project

POSCO International has 5% stake in the Australian Narabri Coal Production Project, which began commercial production in October 2012, producing about 6 million tonnes of bituminous coal per year.

 

-

Myanmar hotel business : POSCO INTERNATIONAL AMARA Co., Ltd., located in Yangon, Myanmar, owns the Lotte Hotel Yangon in Myanmar. The Lotte Hotel Yangon currently consists of 343 hotel rooms and 315 residences for long-term stay guests. Since its opening in September 2017, the hotel has been in operation under a 10-year hotel management contract with Hotel Lotte.

[Energy Sector]

The company has classified its business units into the energy sector, including the Gas Business Unit, Energy Project Development Unit, Energy Infrastructure Unit, and domestic and overseas investment corporations related to power generation such as SENEX Energy.

 

-

Myanmar Gas Field business : Since its production of the first gas in July 2013, gas fields supplies an average of approximately 500 million standard cubic feet of gas per day. In addition, through the second phase of development undertaken to maintain stable gas production, the addition of seven gas production wells was successfully completed in August 2022, maintaining a production capacity system of up to 600 million cubic feet per day.

 

-

LNG Business : The company began LNG trading in 2017 based on Its expertise in developing international energy sources, specialty in trading, and the LNG demand of POSCO Group. In 2023, POSCO international merged with POSCO Energy and obtained an additional value chain across all aspects of the LNG business, from LNG import terminals to generation.

 

-

Onshore gas business in Australia : To execute the group’s carbon neutrality and hydrogen business strategies in a timely manner and expand its existing energy business centered in Myanmar, the company has acquired Senex Energy Limited in Australia. Senex Energy Limited is an energy company located in Brisbane on the east coast of Australia, producing gas from onshore oil and gas fields in eastern Australia for domestic and overseas customers. Recognizing the rising gas demand and high gas prices in the east coast of Australia, the company has launched additional development projects with a targeted three-fold increase in gas production by 2025.

 

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[New business investment]

In addition, POSCO International is searching for new opportunities in four new growth businesses areas which include smart farm, green materials, green mobility and hydrogen.

B. Green Infrastructure [Construction segment]

∎ POSCO E&C

POSCO E&C engages in primarily 3 businesses: plant, civil engineering(infrastructure) and construction.

Plant business is the construction of integrated steel mills, EPC projects and industrial plants. Plant business used to focus on small investment of existing facilities but there will be more new investments in Electric furnace and hydrogen reduction process followed by global green trend. As nuclear power generation is getting attention again, the development of small nuclear power plants is expected to become active.

The civil engineering business is about constructing expressways, railroads and bridges. According to the government’s policy to strengthen regional competitiveness, the construction of regional hubs such as Gadeokdo New Airport, Daegu Gyeongbuk New Airport, and Jeju 2nd Airport will begin, and the road network expansion project such as the Seoul Metropolitan Railway (GTX) will continue to connect major metropolitan areas. It is expected that more favorable overseas construction market would be created for the domestic construction companies as demand of infrastructure development is increasing in Asia, Middle East, Americas as well as in Europe.

Housing demand is shrinking after a sharp rate hike, and number of unsold households are increasing around areas where supply has been concentrated. Recently, concerns have been growing that new orders will shrink as funding has been suspended due to the financial market crunch. Housing market conditions rapidly deteriorated due to sudden interest rate increases, rising construction costs, and a slump in the construction PF market. In terms of overseas market, domestic construction companies have entered Southeast Asia, where urbanization is actively underway, but for now, construction companies’ risk management is expected to be the top priority due to growing economic uncertainties around the world.

B. Green Infrastructure [Logistics and etc. segment]

∎ POSCO DX

POSCO DX has both IT and OT technologies and has secured competitiveness in its manufacturing-based business on the convergence of IT and OT technologies. When domestic ICT market size is estimated to be KRW 39 trillion, POSCO DX is expected to take about 3.0% of domestic ICT market share (ICT market for local corporates only). POSCO DX will continue to adopt POSCO Group’s capabilities in digital transformation, logistics automation, and industrial robot system engineering businesses to create new success stories for sustainable growth even in business environments lots of uncertainties. Based on POSCO Group’s One IT strategy, POSCO DX is expecting to add value by developing IT infrastructure and strengthening the competitiveness of Smart Factory business.

 

13

The experiences operating POSCO’s Smart Factory based on big data, IoT and AI-based platform, led the company to have a strength in the area of continuous and automation process. With its experiences in POSCO’s smart factory construction, POSCO DX is planning to support the mass production system of EV battery materials. In addition, POSCO DX will expand the logistics automation business market with the successful completion of the logistics business in progress. While diversifying logistic business sectors POSCO DX will actively participate new airport BHS project and contribute to the groups’ advancement of the group’s logistic system.

C. Green Materials and Energy

Green Materials and Energy segment include the business related to EV battery materials, such as lithium, nickel, cathode material, anode material, and recycling, and there are a total of 16 subsidiaries, including POSCO Future M and POSCO Argentina.

∎ POSCO Future M

POSCO Future M operates mainly 2 businesses: basic material business and energy material business.

[Basic industrial materials business]

 

-

Refractory production : Refractories maintain their chemical properties and strength even at high temperatures making them indispensable materials for industrial facilities including the furnaces in steelworks and petrochemical plants. In the refractory business, POSCO Future M produces and maintains refractories. In order to keep price competitiveness in the domestic market, the company has expanded its business to China.

 

-

Lime business : In the quicklime & chemical business, POSCO Future M is currently doing consignment operation of cokes plants where purify coke oven gas (COG) in Pohang and Gwangyang. With the chemical products generated in during the purification process, POSCO Future M operates cokes business.

[Energy material business]

In the energy material business, POSCO Future M provides cathode and anode materials which are the main components for secondary cell: cathode, anode, electrolyte and separation membrane. It is planned to expand its production of natural graphite anode materials from 74 thousand ton/year in 3Q 2023 to 182 thousand ton/year in 2030. In addition, artificial graphite production is expected to have a production capacity of 168 thousands ton/year in total by 2025. Furthermore, cathode material production is expected to increase from 105 thousands ton/year to 1,000 thousands ton/year by 2030. Due to environment-friendly policy with less carbon emission worldwide, demands for Energy Storage System and Electric Vehicle are expected to grow continuously.

According to the battery market research company SNE Research, LG Energy Solution, our major revenue source, recorded the 3rd highest global market share (12.3%) in EV batteries as of 2022, indicating a decrease compared to the previous year. However, battery usage continues to show steady growth with a 9.7% increase compared to the same period last year. Along with this growth, in April 2023, POSCO Future M also signed a

 

14

long-term contract worth approximately KRW 30 trillion for cathode materials. Furthermore, POSCO Future M has recently diversified the sales sources including Samsung SDI and plan to supply approximately 40 trillion won worth of cathode materials (NCA) over the next 10 years.

The secondary battery market for electric vehicles is expected to grow due to China’s strong electric vehicle industry development policy, European CO₂ emission regulations, and global OEMs’ proportion of electric vehicle.

POSCO Group has established full battery material value chain from raw materials business to battery materials and recycling business. As the only domestic producer of graphite-based anode materials, which are considered to have the highest degree of difficulty in achieving independence from Chinese imports, POSCO Future M is expected to expand its sales revenues in working with global automakers and battery producers.

In specific, POSCO Future M established a joint venture (Ulium CAM) with GM in August 2022 to begin construction of high nickel cathode plant in Canada with a production capacity of a 30 thousand ton per year.

It is planned to be completed in the second half of 2024 and to start production in the first half of 2025. In addition, for lithium, which is a raw material for anode materials, POSCO HOLDINGS (the largest shareholder of POSCO Future M) plans to establish a 71 thousand tons production system in 2024 through investment in Argentine salt lakes and Australian mines and expand its production capacity to 423 thousand tons by 2030.

Considering POSCO Future M’s cathode material production capacity and lithium input amount, lithium self-sufficiency rate is expected to exceed 100% by 2030. In addition, POSCO HOLDINGS plans to establish a 240 thousand ton nickel production system by 2030 by expanding its investment in securing nickel through mining, smelting and recycling.

Global Cathode and Anode Material Market Outlook

(Ten thousand Tons)

 

(SNE Research)

D. Others

In Others segment, there are 12 subsidiaries in total, including POSCO HOLDINGS. POSCO HOLDINGS is focusing on investment in new growth businesses and opportunities.

 

15

3. Key Products

A. Sales of Key Products (2023.3Q)

(In hundred millions of KRW, %)

 

Business Area		Item		Specific Use		Total Sales				Ratio
Steel		Hot-rolled Product (HR)		Steel pipe, Shipbuilding, etc.			102,117			21.2%
		Cold-rolled Product (CR)		Automobile, Home appliances, etc.			147,209			30.6%
		Stainless Steel Products		Tableware, pipes, etc.			82,772			17.2%
		Others		Plates, Wire rods, etc.			149,096			31.0%
		Gross Sum					481,194			100.0%
		Deduction of Internal Trade					-174,328
		Sub Total					306,866
Green Infra		Trading		Steel, Metal			243,190			56.7%
				Chemical, Strategic Item, Energy			21,857			5.1%
				Others			59,383			13.8%
		Construction		Architecture (Domestic)			31,924			7.4%
				Plant (Domestic)			16,941			3.9%
				Civil Engineering (Domestic)			8,367			2.0%
				Others (Domestic)			1,400			0.3%
				Overseas Construction			11,358			2.6%
				Owned Construction			2,046			0.5%
				Others			2,693			0.6%
		Logistics and etc.		Others			29,813			6.9%
		Gross Sum					428,973			100.0%
		Deduction of Internal Trade					-181,515
		Sub Total					247,458
Green		Gross Sum					36,683			100.0%
Materials and		Deduction of Internal Trade					-7,288
Energy		Sub Total					29,395
Others		Gross Sum					13,470			100.0%
		Deduction of Internal Trade					-12,558
		Sub Total					912
Total Sum							584,631

 

16

B. Price Movement Trends of Key Products

(In thousands of KRW/ Tons, KRW/kWh)

 

Business Segment		Products		2023.3Q				2022				2021
Steel		Hot-rolled Product (HR)			984				1,105				970
		Cold-rolled Product (CR)			1,165				1,293				1,035
Green Infrastructure		Electric Power			215				224				98
Green Materials and Energy		Refractory			1,006				1,022				913
		Lime			147				117				104

 

Above price movement trend of steel segment in 2022 is based on the price between March 1 to December 31, 2022 (HR and CR price in 3Q 2022 is 1,163 and 1,300 thousand won)

Construction and Logistics and etc. segments of Green Infrastructure are omitted due to its difficulties of measuring raw materials fluctuations. In the case of the secondary battery material business, detailed descriptions are not included due to risk of information leakage

[Steel]

(1) Criteria for Calculation

 

(a)

Subjects for Calculation: Unit sales prices of the standard hot-rolled product and cold-rolled product

 

(b)

Calculation Method and Unit: The average price of each product based on its total sales including the freight costs during the given period.

(2) Factors of Price Changes

The company partially adjusted the price of major steel products in the second quarter, in consideration of the overall steel market, such as the delay in economic recovery due to the continued high-interest rate trend and the production of global steel companies. As the company has a high proportion of long-term contracts, the price adjustment in the second quarter is expected to be reflected in the third quarter sales.

[Green Infrastructure]

(1) Criteria for Calculation

 

(a)

Subjects for Calculation: Price of electric power

 

(b)

Calculation Method and Unit: Unit price per electric power ÷ Net power volume generated

(2) Factors of Price Changes

Power: Korea Gas Corporation cost, etc.

 

*

The cost consists of introduction cost, supply cost, etc., and is affected by crude oil and exchange rates

 

17

[Green materials and Energy]

(1) Criteria for Calculation

 

(a)

Subjects for Calculation: Unit price of refractory and quicklime

 

(b)

Calculation Method and Unit: The average price of each product based on its total sales including the freight costs during the given period.

(2) Factors of Price Changes

 

-

Price of refractories is affected by business condition of front industry and raw material cost.

 

-

Quicklime price is mainly influenced by utility unit price and raw materials cost. The price fluctuation of quicklime is small.

 

-

Raw materials for energy materials are subject to price fluctuations depending on the international supply of mineral resources.

 

18

4. Major Raw Materials

A. Current Status of Major Raw Materials

 

														(In hundred millions of KRW)
Business Segment				Type of Purchase		Item		Specific Use		Purchase Amount (Portion, %)				Portion (%)				Remarks
				Raw Materials		Materials for Iron-making		Iron Ore for Blast Furnaces			131,025				60.8	%		Iron Ore, Coal
Steel						Sub-materials		Sub-materials for Iron-making, Steelmaking			43,821				20.3	%		Iron Material, Alloy Iron, Non-ferrous Metal, Limestone, etc.
						Stainless Steel Materials		Key Materials for STS Production			40,777				18.9	%		Nickel, Ferrochrome, STS Scrap Iron, etc.
Green Infrastructure		Trading		Raw Materials		LNG		Material for Power Generation			16,332				100.0	%		—
		Construction		Raw Materials		Ready-mixed Concrete		Construction of Structure			2,607				20.5	%		—
						Steel Reinforcement		Strengthening Concrete			2,618				20.6	%		—
						Cable		Electricity Transfer			146				1.2	%		—
						Steel Pile		Foundation of Structure			98				0.8	%		—
						Others		Construction of Pipe and Structure etc.			7,239				57.0	%		—
		Logistics and etc.		Raw Materials		Others		For other use			7,176				100.0	%		—
Green Materials and Energy				Raw Materials		NCM and etc.		Production of cathode materials			30,909				91.5	%		—
						Graphite and etc.		Production of anode materials			853				2.5	%		—
						Limestone and etc.		Production of Lime			858				2.5	%		—
						Others		Production of refractory			1,150				3.4	%		—

 

*	Amount: CIF + customs duties + stevedoring fees + other incidental expenses

 

19

B. Price Movement Trends of Major Raw Materials

(In thousands of KRW)

 

Business Segment				Category		2023.3Q		2022		2021
Steel				Iron Ore(per ton)		142		143		169
				Coal(per ton)		369		472		257
				Scrap Iron(per ton)		532		605		563
				Nickel(per ton)		29,763		33,147		21,130
Green Infrastructure		Trading		LNG (per ton)		1,507		1,594		702
		Construction		Ready-mixed Concrete (per m3)		85		77		68
				Steel Pile (per m)		165		180		272
				Steel Reinforcement (per kg)		1.0		1.0		1.0
				Cable (per m)		0.9		0.9		1.2
Green Materials and Energy				Refractory (per ton)		358		479		320
				Limestone (per ton)		25		22		19

 

Green Infrastructure (Logistics and etc. segment) and Others segment are omitted due to its difficulties of measuring raw materials fluctuations. In the case of the EV battery material business, detailed descriptions are not included due to risk of information leakage

 

20

[Steel]

 

Price Movement Trend of Major Raw Materials

(1) Iron Ore: Iron ore prices rose 4% quarter-on-quarter to U$106/ton in the third quarter of 2023 due to the demand for inventory stockpiling before the Chinese National Day holiday and expectations of an economic recovery from government stimulus measures.

 

																												(In US Dollars/ Tons)
‘23.3Q				‘23.2Q				‘23.1Q				‘22.4Q				‘22.3Q				‘22.2Q				‘22.1Q				‘21.4Q				‘21.3Q				‘21.2Q				‘21.1Q
	106				102				118				90				94				126				132				96				148				188				158

(2) Coal: While production disruptions of some Australian mining companies led to a drop in supply, raw coal prices rose 9% quarter-on-quarter to U$264/ton in the third quarter of 2023, with continued solid demand from India/Southeast Asia.

 

																												(In US Dollars/ Tons)
‘23.3Q				‘23.2Q				‘23.1Q				‘22.4Q				‘22.3Q				‘22.2Q				‘22.1Q				‘21.4Q				‘21.3Q				‘21.2Q				‘21.1Q
	264				243				344				278				250				446				488				369				264				137				127

(3) Scrap: Iron scrap prices fell 5% quarter-on-quarter to U$385/ton in the third quarter of 2023 due to continued sluggish construction industry and lower demand for iron scrap due to steelmaking production cuts.

 

																												(In US Dollars/ Tons)
‘23.3Q				‘23.2Q				‘23.1Q				‘22.4Q				‘22.3Q				‘22.2Q				‘22.1Q				‘21.4Q				‘21.3Q				‘21.2Q				‘21.1Q
	385				403				438				387				394				531				562				527				500				497				443

(4) Nickel: While demand slumped due to continued austerity measures in major countries, nickel prices fell 9% quarter-on-quarter to U$20,344/ton in the third quarter of 2023 due to increased supply, such as increased LME inventories and increased production of NPIs in Indonesia.

 

																												(In US Dollars/lb, US Dollars/Tons)
‘23.3Q				’23.2Q				‘23.1Q				‘22.4Q				‘22.3Q				‘22.2Q				‘22.1Q				‘21.4Q				‘21.3Q				‘21.2Q				‘21.1Q
	9.23				10.12				11.79				11.48				10.01				13.13				11.98				8.99				8.68				7.87				7.97
	20,344				22,308				25,983				25,292				22,063				28,940				26,395				19,821				19,125				17,359				17,570

 

LME: London Metal Exchange

 

21

[Green Infrastructure]

(1) Criteria for Calculation

 

Business Sector		Products		Criteria for Calculation		Factors of Price Changes
Trading		LNG		Average purchase price and LNG direct purchase price of Korea Gas Corporation		Cost of Korea Gas Corporation (cost consists of introduction cost, supply cost, etc. and is affected by crude oil, exchange rate, etc.)
Construction		Ready-mixed Concrete		Standard 25-210-15		No change in price
		Steel Pile		SPIRAL,609.6,12T,STP275,KS F 4602,STEEL PILE		Changes in unit price due to decrease in raw material (coil) price
		Steel Reinforcement		SD400 10mm		Decrease the price of raw materials (scrap)
		Cable		TFR-3, 0.6/1KV, 2.5SQ, 2C		The LME market price fluctuates due to a slight decline and a rise in the exchange rate, but it does not have a significant impact on the price fluctuations

[Green Materials and Energy]

(1) Criteria for Calculation

- Refractory and lime: Purchase prices including freight costs

(2) Factors of Price Changes

- Refractory raw materials: Price fluctuations and compositional costs of raw materials in China

- Limestone: Raw material price fluctuation is not extreme and it varies slightly depending on the freight cost

- Energy materials: Price trends are not disclosed considering concerns about information leakage

 

22

5. Production and Facilities

A. Production Capacity

[Steel]

∎ POSCO

 

				(Thousands of Tons)
Business Area		Products		2023.3Q				2022				2021
Steel		Crude Steel			30,426				40,680				40,680

 

*	The steel production above includes POSCO’s performance before the spin-off (January to February).

∎ POSCO STEELEON

 

						(Thousands of Tons)
Business Area		Products		Plant		2023.3Q				2022				2021
Steel		Galvanized / Color- coated Steel		Pohang			718				960				960
				Myanmar			52				70				70
Total							770				1,030				1,030

∎ POSCO M-TECH

 

														(Tons)
Business Area		Products				2023.3Q				2022				2021
Raw materials for steel production			Ingot and etc.				31,683				39,058				38,080

[Green Infrastructure]

∎ POSCO ENERGY

 

										(Electric Power: MW/year)
Business Area		Products								2023.3Q				2022				2021
Power Generation			Electric Power				Incheon				3,412				3,412				3,412

[Green Materials and Energy]

∎ POSCO FUTURE M

 

										(Thousands of Tons)
Business Area		Products		Place of Business		2023.3Q				2022				2021
Refractory		Brick and etc.		Pohang			87,180				116,560				113,000
LIME		Quicklime		Pohang			819,000				1,095,000				1,095,000
				Gwangyang			819,000				1,095,000				1,095,000
Total							1,725,180				2,306,560				2,303,000

 

*	In the case of the energy materials sector, detailed notation was omitted in consideration of technology and information leakage concerns.

 

23

B. Production Result and Capacity Utilization Rate

[Steel]

(1) Production

 

				(Thousands of Tons)
Products				2023.3Q				2022				2021
Crude Steel					29,891				37,928				42,964
Products		Hot-Rolled Steel			8,534				9,268				9,243
		Plate			4,841				5,857				6,832
		Wire Rod			1,774				1,988				2,688
		Pickled-Oiled Steel			2,101				2,847				2,880
		Cold-Rolled Products			4,827				7,623				7,898
		Coated Steel			5,443				6,708				7,446
		Electrical Steel			619				1,005				1,032
		Stainless Steel			2,486				3,400				4,099
		Others			1,308				3,261				3,106
		Total			31,933				41,957				45,224

 

The amount of products is the aggregate amount of POSCO’s production and production of POSCO’s subsidiaries, which may include interested parties’ transactions.

POSCO’s production result includes production of POSCO HOLDINGS before the spin-off date (March 1, 2022), and production of POSCO after the spin-off date.

(2) Capacity Utilization Rate

 

 

								(Thousands of Tons, %)

		Company		Capacity				Production				Utilization Rate
Crude Steel Production		POSCO			30,426				26,662				87.6	%
		PT.KRAKATAU POSCO			2,270				2,273				100.1	%
		POSCO (Zhangjiagang) Stainless Steel Co., Ltd.			825				647				78.4	%
		POSCO YAMATO VINA STEEL JOINT STOCK COMPANY			413				309				75.0	%
		Total			33,934				29,891				88.1	%

[Green Infrastructure]

 

Since it is difficult to measure production result and operating rates of Green Infrastructure (Construction), and Green Infrastructure (Logistics and etc.) segments considering the nature of the business, they are omitted in this part.

 

24

∎ POSCO INTERNATIONAL

(1) Production Result

 

				(Gwh)
Business Area		Products		2022.3Q				2022				2021
Power Generation		Electric Power			8,455				11,189				13,493

(2) Capacity Utilization Rate

 

(Hour, %)

Business Area

Products

2023.3Q Capacity

2023.3Q Production

Utilization Rate

Power Generation

Incheon Power Plant

6,552

3,704

56.6

%

[Green Materials and Energy]

∎ POSCO FUTURE M

(1) Production Result 

 

										(Tons)
Business Area		Products		Place of Business		2023.3Q				2022				2021
Refractory		Brick and etc.		Pohang			59,381				81,094				83,884
LIME		Quicklime		Pohang			846,494				1,043,109				1,151,419
				Gwangyang			925,477				1,176,611				1,295,720
Total							1,831,352				2,300,814				2,531,023

 

Coke oven gas (COG) facility is a simple consignment operation for POSCO facilities, so production performance is omitted

In the case of the EV battery material business, detailed descriptions are not included due to risk of information leakage

(2) Capacity Utilization Rate (2023.3Q)

 

 

										(Tons,%)
Business Area		Capacity				Production				Utilization Rate
Refractory Factory			87,180				59,381				68
Quicklime Factory (Pohang)			819,000				846,494				103
Quicklime Factory (Gwangyang)			819,000				925,477				113
Total			1,725,180				1,831,352				—

 

Coke oven gas (COG) facility is a simple consignment operation for POSCO facilities, so production performance is omitted

In the case of the EV battery material business, detailed descriptions are not included due to risk of information leakage

 

25

C. Production Facilities

(1) The current status of production facilities

 

[Land]																(In millions of KRW)
Business Segment				Beginning Book Balance				Increased				Decreased				Depreciation				Ending Book Balance
Steel					1,814,272				84,032				-5,989				—				1,892,315
Green Infrastructure		Trading			185,495				289,918				—				—				475,413
		Construction			382,586				1,693				—				—				384,279
		Logistics and etc.			399,389				—				-290,779				—				108,610
Green Materials and Energy					200,438				87,043				—				—				287,481
Others					120,985				54,835				—				—				175,820
[Buildings]
																(In millions of KRW)
Business Segment				Beginning Book Balance				Increased				Decreased				Depreciation				Ending Book Balance
Steel					3,081,547				240,770				-76,417				-228,007				3,017,893
Green Infrastructure		Trading			486,865				385,869				-278,024				-14,159				580,551
		Construction			75,728				10,021				-204				-2,257				83,288
		Logistics and etc.			187,725				2,350				-76,418				-5,874				107,783
Green Materials and Energy					231,104				225,903				-21,624				-11,155				424,228
Others					111,925				289				-4,896				-1,406				105,912
[Structures]
																(In millions of KRW)
Business Segment				Beginning Book Balance				Increased				Decreased				Depreciation				Ending Book Balance
Steel					2,515,379				155,060				-39,923				-190,626				2,439,890
Green Infrastructure		Trading			62,033				1,165,465				-736,243				-17,895				473,360
		Construction			26,888				25,508				-3,530				-1,366				47,500
		Logistics and etc.			531,573				330				-419,274				-7,019				105,610
Green Materials and Energy					20,865				22,394				-57				-1,724				41,478
Others					6,189				4,011				-2,059				-136				8,005
[Machinery and Equipments]
																(In millions of KRW)
Business Segment				Beginning Book Balance				Increased				Decreased				Depreciation				Ending Book Balance
Steel					14,230,273				1,639,209				-597,698				-1,691,688				13,580,096
Green Infrastructure		Trading			392,562				2,907,839				-1,976,755				-111,632				1,212,014
		Construction			7,321				957				-369				-1,269				6,640
		Logistics and etc.			1,150,735				3,056				-833,498				-35,235				285,058
Green Materials and Energy					629,658				604,198				-26,564				-70,943				1,136,349
Others					12,281				—				-10,681				-714				886

 

26

[Vehicles]
																(In millions of KRW)
Business Segment				Beginning Book Balance				Increased				Decreased				Depreciation				Ending Book Balance
Steel					33,443				45,180				-9,414				-13,615				55,594
Green Infrastructure		Trading			8,592				8,492				-1,417				-1,973				13,694
		Construction			4,599				4,920				-1,957				-1,121				6,441
		Logistics and etc.			863				426				-139				-171				979
Green Materials and Energy					4,620				6,675				-711				-2,266				8,318
Others					14				—				-1				-5				8
[Tools and Fixtures]
																(In millions of KRW)
Business Segment				Beginning Book Balance				Increased				Decreased				Depreciation				Ending Book Balance
Steel					55,774				49,500				-20,629				-20,704				63,941
Green Infrastructure		Trading			25,494				17,060				-7,544				-10,271				24,739
		Construction			1,148				492				-140				-416				1,084
		Logistics and etc.			2,026				3,113				-1,290				-708				3,141
Green Materials and Energy					6,488				29,009				-126				-7,352				28,019
Others					31				1				—				—				32
[Equipment]
																(In millions of KRW)
Business Segment				Beginning Book Balance				Increased				Decreased				Depreciation				Ending Book Balance
Steel					101,743				48,986				-23,199				-26,354				101,176
Green Infrastructure		Trading			27,791				24,396				-16,183				-7,816				28,188
		Construction			8,329				4,412				-2,641				-2,304				7,796
		Logistics and etc.			13,197				5,077				-2,664				-1,995				13,615
Green Materials and Energy					8,872				4,823				-67				-2,868				10,760
Others					13,413				1,087				-98				-1,003				13,399

 

27

[Financial Lease Assets]
																(In millions of KRW)
Business Segment				Beginning Book Balance				Increased				Decreased				Depreciation				Ending Book Balance
Steel					508,323				47,644				-269,219				-33,641				253,107
Green Infrastructure		Trading			250,884				276,488				-92,691				-39,059				395,622
		Construction			50,171				86,038				-63,222				-29,375				43,612
		Logistics and etc.			34,406				184,539				-3,255				-5,292				210,398
Green Materials and Energy					54,708				65,641				-7,834				-16,657				95,858
Others					22,706				871				-133				-1,932				21,512
[Biological Assets]
																(In millions of KRW)
Business Segment				Beginning Book Balance				Increased				Decreased				Depreciation				Ending Book Balance
Steel					—				—				—				—				—
Green Infrastructure		Trading			141,720				10,507				—				-7,217				145,010
		Construction			—				—				—				—				—
		Logistics and etc.			—				—				—				—				—
Green Materials and Energy					—				—				—				—				—
Others					—				—				—				—				—
[Assets under Construction]
																(In millions of KRW)
Business Segment				Beginning Book Balance				Increased				Decreased				Depreciation				Ending Book Balance
Steel					1,780,285				2,446,802				-1,149,448				—				3,077,639
Green Infrastructure		Trading			129,279				211,918				-60,509				—				280,688
		Construction			21,292				49,534				-31,615				—				39,211
		Logistics and etc.			88,692				67,788				-60,879				—				95,601
Green Materials and Energy					1,487,942				1,756,548				-977,681				—				2,266,809
Others					30,535				16,781				-7,657				—				39,659

(2) New Facility Establishment, Purchase, Etc.

(a) Investments under Construction                

 

28