Posco Chemical said Wednesday it has signed a long-term supply deal with China’s Huayou Cobalt for cathode materials, a key material for electric vehicle batteries.

According to the company, Huayou Cobalt -- the world’s biggest cobalt supplier -- will supply 76,300 metric tons of precursors until December 2022. The exact size of the deal is unknown.

Precursor is an immediate product used in producing cathode materials, and cathode is a one of the four key components of a lithium-ion battery, along with the anode, electrolyte and separator.

“Though Posco Chemical is capable of manufacturing precursors on its own, the deal was signed to diversify its supply chain. The size of the deal is small, and some media reports that we are becoming more dependent on China are incorrect,” a company official said.

Huayou Cobalt’s precursors are expected to be used for Posco’s high-nickel NCM precursors, which are named after lithium, nickel, cobalt and manganese.

Huayou Cobalt is set to deliver the first batch of 17,850 tons of precursors to Posco soon.

By Kim Byung-wook (kbw@heraldcorp.com)