PoSCO Holding's Financial Strategies and Outlook
PoSCO Holding has outlined its plans for the $2.5 billion raised through the monetization of its subsidiary shares. Approximately $1.1 billion will be allocated towards acquiring a stake in an Australian lithium mine, while $250 million will be utilized for the repurchase and subsequent retirement of its own shares before the year-end. The company has decided to prioritize shareholder returns, opting not to wait for further subsidiary share monetization.
During the third-quarter earnings conference call on November 2nd, PoSCO Holding unveiled these strategies. The company's consolidated revenue for the quarter reached $191.41 billion, representing a notable increase of approximately 10.9% year-over-year. Operating profit stood at $945 million, a substantial growth of 47.9% compared to the previous year. PoSCO's core steel subsidiary witnessed a significant improvement, with its operating profit surpassing the $400 million mark. This performance can be attributed to increased selling prices, higher production and sales volumes, and cost-cutting measures.
In addition to enhanced profitability, the company's financial metrics have also shown improvement. The consolidated operating profit margin increased from 4.3% in the previous quarter to 4.9%. The company's debt position improved significantly, with borrowings decreasing from $161.06 billion to $118.37 billion, a reduction of $42.69 billion. The net debt-to-equity ratio also decreased by 6.7 percentage points, falling from 25.1% to 18.4%.
PoSCO's Accelerated Buyback: Where Will $2.5 Billion Go?
[Source: POSCO Holdings, Consolidated Financial Performance and Metrics, Q3 2026]
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PoSCO Holdings Speeds Up Share Buyback, But Where's the Cash Going?
PoSCO Holdings has been active, liquidating its stakes in PoSCO International and PoSCO DX in August. The transactions amounted to approximately $20.184 billion and $4.817 billion, respectively, totaling a substantial $25 billion. While their stake in both companies has been reduced to 50%, they have maintained their position as the majority shareholder.
The deals utilized three-year maturity price return swaps (PRS), where financial institutions engage in stock-based transactions, with future price fluctuations determining the settlement amount. This strategy secured cash while retaining the burden of potential future settlements based on stock price movements.
PoSCO Holdings has also accelerated its shareholder return timeline. Initially, they planned to consider share buybacks and cancellations after liquidating their stake in PoSCO Future M. However, they have decided to execute this buyback using the funds already secured, with an estimated value of $2.5 billion, before the end of the year.
During a conference call, the company explained that the current stock price does not adequately reflect its asset value and future earning potential. This background information sheds light on why they chose to proceed with the share buyback and cancellation without waiting for the PoSCO Future M stake liquidation.
$2.5 Billion Investment Strategy and its Impact on the Lithium Market
A sum of approximately $1.35 billion has been allocated for lithium mine investments and shareholder returns, as part of a larger $2.5 billion initiative. The remaining funds are planned to be utilized for subsequent investments in Argentina's lithium sector, with considerations also being made to reduce debt burdens prior to the execution of these investments.
Varying Timelines for Lithium Profits: Argentina Leads, Ore Business Lags
Within the lithium business, the pace of profitability recovery differs across production facilities. While Argentina's brine lithium aims for operational profitability next year, increasing production, the ore lithium business is focused on achieving EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) profitability, excluding depreciation and amortization.
#### Investment in Australian Mines: Expanding Lithium Raw Material Supply
POSCO Holdings signed a $1.1 billion deal in April with Mineral Resources, an Australian company, to acquire indirect stakes of 15% each in the Woojina and Mount Marion mines in Western Australia. Upon completion of this transaction, the company will also expand its supply base of lithium raw materials.
#### Improved Performance of Target Mines
According to Mineral Resources' 2026 fiscal year data, the combined EBITDA of these two mines increased more than eightfold, from $93 million AUD to $772 million AUD. This improvement was driven by increased concentrate sales volumes, price increases, and reduced production costs.
Argentina's Lithium Expansion Plans
Argentina aims to ramp up production at its newly completed Lithium Plant 2, targeting a capacity utilization rate of 70% by July next year and 90% by December. The company anticipates achieving an operating profit in Q3 of next year, assuming current lithium prices. Additionally, production at Plant 1 will be increased from 14,000-15,000 tonnes this year to 21,000-22,000 tonnes in 2024.
Profitability Outlook for Ore-based Lithium Operations
The ore-based lithium business requires more time to improve profitability. Posco-Pilbara Lithium Solutions' raw material costs have decreased from 80-87% of the H1 sales price to less than 70% currently. The price gap between the product and raw materials has also widened from $3.5-$4 per kg to $4.5-$5 per kg.
However, the company's breakeven point for operating profit is set at $6 per kg. With the current price difference, it may be challenging to cover all depreciation costs, hence the focus on achieving EBITDA profitability as a priority for next year.
