So China risk, I don’t think in our business is big. Chinese companies have invested massively in Indonesia for nickel production. And because they put so much of supply out there, yes, price is falling, but the price of nickel is determined by benchmarks such as WoodMac. And we’re looking at about $17,000 being the benchmark price. Right now, we’re at $15,000-$16,000. So if there is some price adjustment, it’s not going to be big. And how do I know? What is the rationale? Because the lowest price imports use the dry method. Dry method nickel from a cost of production perspective is most superior. MPA cost is about $10,000. Nickel matte production cost is about $2,000. And then refining takes about another $2,000. So nickel sulfate using dry method, it will be about $14,000 at cost.
So right now, we’re seeing $15,000 or $16,000 as the price. There’s not very much margin there. But of course, in other parts of the world, such as Australia, they are not able to make any profit, and that’s why the market is generally in adjustment. So for nickel, there is room for a little bit of price increase, but probably not by much. And so that’s our projection. The rechargeable battery materials business is slow. Nickel prices are falling. And so I think you’re concerned about whether we will change our investment plans, clearly, nickel is part of NCM battery. And Future M has market demands that need to be met. So we will make some adjustments by rating the market, but whether we will dramatically shift our strategy, that’s not likely.
We will make adjustments based on market situation and timeline, project schedule and so on and so forth. So that concludes my response.
Suh Ji-Won: My name is Suh Ji-Won. I’m with the POSCO raw materials office. On coking coal, the price is quite high. What is the reason? From a demand perspective, it’s because India is putting out a lot more volume. And there are many new businesses that are producing coke. But on the supply side, because of difficulties in acquiring labor as well as inclement climate, weather conditions, this is the reason for the hike in price. So mid-term price strategy, starting this year with new project starts because new plants will come online and ramp up, we will see about 10 million tonne expansion in production. And so price-wise, it will not be as high as the previous year, but we will see it stabilize. Investments. Coking coal and raw materials investments, we have a basic ground rules.
So we have target prices as well as partners, investors, and they have to be ESG issue-free. So these are some of the benchmarks of our investment plan. And with coking coal, we have some concerns because we have to make some adjustments based on our net zero goal. That concludes my response.
Operator: The next question will come from Hyun-Soo from Yuanta Securities.
Hyun-Soo: My name is Hyun-soo. I’m from Yuanta Securities. I think this was already mentioned. In battery materials, IRA and FEOC are concerns. I would like to know how you will address this going forward. Secondly, because of dull demand in China, there’s oversupply because they continue to produce just as much. So I think if this trend continues, we will end up importing more from China. What is your response to this? And the next question, NSC is acquiring U.S. Steel. If my memory is correct, in July of 2021, POSCO released record-level crude steel production and made some promises. So I want to know what is happening with this plan. And I want POSCO’s opinion on NSC’s acquisition of U.S. Steel. One more question in NSC.
Young-Ah Han : We will ask Mr. Ban Don-ho from POSCO’s marketing strategy office. And on exports, we will ask Mr. Kim Kyung-Han from international trade office.
Ban Don-ho: For battery materials, I already mentioned FEOC when I was addressing nickel. Nickel has no relevance to FEOC because it doesn’t involve China. So FEOC applies globally to nickel. For nickel, for IRA-compliant volume, we will use the production from SNNC plant in Gwangyang. So we will complete construction in March this year, and this is where our nickel — IRA compliant nickel would be produced and supplied to POSCO Future M. So JVs with China that are subject to FEOC, there are some that target European markets, but others target other markets. For example, if Indonesia does not need IRA rules, then we are prepared to accept that. If, however, Indonesia is recognized as an FTA compliant or equivalent partner company, then we anticipate additional benefits on top of what we’re anticipating.
So we don’t anticipate any direct negative or adverse impact of FEOC on our business in this year. At POSCO Future M, in their graphite business — natural graphite business for anode active materials, FEOC or other IRA rules or detailed guidelines have not been released. And so I think they’re still discussing and going through some adjustments. So once they’re released, we will address them. For natural anode active materials, we are producing spherical graphite. And right now, we import a lot of that from China. We will try and make that more endogenous to Korea.
