Posco has taken another step forward in the secondary battery recycling business, as it landed a new partnership deal with Chinese cobalt supplier Huayou Cobalt on Friday.

The steelmaker inked a joint investment deal with the government of South Jeolla Province and Huayou Cobalt, a Shanghai-listed company specializing in material refining and purification.

The secondary recycling business involves extracting core materials used in making secondary batteries, such as nickel and lithium from used batteries.

“We will cooperate with South Jeolla Province and Huayou Cobalt to gain technological leadership and global competitiveness in the eco-friendly battery recycling business. Together with Posco Lithium Solution, we will grow in the secondary battery industry as a core material supplier,” Posco Vice President Chung Chang-hwa said at the signing ceremony. The size of the deal was not disclosed.

Posco’s board of directors decided to invest in the recycling business for lithium ion battery scraps in a board meeting in December. Earlier this month, the Korean steelmaker established a joint corporation with Huayou Cobalt, named Posco HY Clean Metal, taking 65 percent of the share, the company said.

Posco HY Clean Metal will reprocess used battery scraps in battery factories in Europe into “black powder” and import them for recycling here.

The company will invest 120 billion won ($107.5 million) in the Gwangyang Yulchon Industrial Complex in Gwangyang, South Jeolla Province for construction of a production line to reprocess about 10,000 metric tons of black powder annually, Posco said. The steelmaker also has plans to expand the facility in the future.

Posco recently broke ground for a lithium hydroxide plant, with an annual production capacity of 43,000 tons in Gwangyang. The company said it plans to gradually increase the annual lithium production volume to 70,000 tons in 2023, then up to 130,000 tons in 2026 and 220,000 tons by 2030.

By Jo He-rim (herim@heraldcorp.com)