Kim Seung-jun (right), head of POSCO Holdings’ finance and investor relations division, and James Scriven, chief executive of IDB Invest, pose for a photo after signing a credit line agreement for POSCO Argentina at the POSCO Center in Seoul on Aug. 28. /POSCO Holdings
POSCO Holdings (005490.KS) has secured a $700 billion liquidity facility from an international financial institution, shoring up working capital for its brine lithium operations in Argentina.
POSCO Argentina, the group’s brine lithium production unit, won approval for a $700 million short-term borrowing facility from IDB Invest, the private-sector arm of the Inter-American Development Bank (IDB) Group, POSCO Holdings said on the 28th. The facility was approved on the 4th, and a signing ceremony attended by officials from both sides was held at POSCO Center in Seoul on the same day.
The IDB provides financing to resource development projects in the region with strong business viability and competitiveness as part of its strategy to support critical mineral supply chains in Latin America. It gave high marks to POSCO Argentina’s lithium business for meeting global environmental, social and governance (ESG) standards and contributing to economic development in the region.
The facility allows the company to secure working capital for its first brine lithium plant and a second plant scheduled for completion in the second half of the year. Tax benefits on interest and financial transaction taxes under the intergovernmental agreement that established the IDB are expected to cut project financing costs substantially and lift profitability.
The approval follows the Argentine government’s endorsement of the project under its Large Investment Incentive Regime (RIGI), obtained after a Korea-Argentina summit on the 31st of last month, in what is seen as a prominent case of successful public-private cooperation.
POSCO Argentina posted its first quarterly profit in the second quarter. With public-private cooperation, institutional backing from the Argentine government and funding from international financial capital now aligned, the group’s push to develop core strategic resources is expected to gain momentum.