Posco Chemical Company, a subsidiary of South Korea’s steel giant Posco, announced plans to build a new cathode materials plant in South Korea to meet rising global demand for electric vehicle (EV) batteries.

The company said it would spend KRW600bn (US$523m) to build a plant with an initial annual capacity of 60,000 tonnes of cathode material in the port city of Pohang, with construction scheduled to begin in 2022.

Capacity would eventually by lifted to 160,000 tonnes per year, enough for 1.8m EV battery packs with a power output of 60kwh.

The company already makes cathode materials at plants in the industrial city of Gumi and in the port city of Gwangyang, both also in South Korea.

The company also said it aimed to build similar plants in key overseas locations, including the US, Europe and China, where significant new EV battery production capacity is being built at present.

Demand for EVs is expected to grow rapidly over the next two decades, with many governments around the world having announced in the last year that they will ban the sale of new vehicles powered by internal combustion engines by 2030-2040.