The Posco logo is seen outside of Posco Center in Seoul, South Korea, on July 22, 2021. The South Korean company Posco Holdings is considering investing in the exploration, development and commercialization of lithium in Alberta. THE CANADIAN PRESS/Bae Hun-shik-Newsis via AP

CALGARY - South Korean company Posco Holdings is considering investing in the exploration, development and commercialization of lithium in Alberta.

The company —which is best known for steel production but also invests in minerals, energy and more — signed a memorandum of understanding this week with provincial Crown corporation Invest Alberta.

Under the terms of the agreement, Posco will begin exploring prospects for lithium investment in Alberta, while the province will support the Korean company's ambitions by helping them navigate the acquisition of mining rights as well as regulatory and tax-structure requirements.

“Through our strategic collaboration with Invest Alberta, Posco Holdings is not only advancing our commitment to securing lithium but also reinforcing our standing in the global secondary battery supply chain," said Kyung Sub Lee, Posco Holdings executive vice-president, in a news release.

"When we make these public types of announcements, it’s a clear signal to the market that says Posco is highly interested, highly engaged," said Rick Christiaanse, chief executive of Invest Alberta.

"They are well advanced, so it’s really now just a question of them picking the right projects and then moving forward.”

The development is the first public indication that major foreign investors are eyeing Alberta's lithium resources.

Lithium, a light metal, is in demand around the globe right now because it is a key component in electric vehicle batteries.

Currently, the world's biggest lithium producers are Australia, Chile and China. However, it has long been known that Alberta, a major oil-and-gas producer, is also home to one of the world's largest underground lithium deposits.

Until recently, there has been little interest in developing this deposit, but the growth in electric vehicles and exponential demand for lithium-ion batteries has changed that.

Lithium is now a key focus of the government of Canada's $3.8-billion, eight-year critical minerals strategy, which aims to increase domestic extraction and production of the metal along with other previously under-developed resources such as cobalt, copper, titanium and zinc.

The government of Alberta has also identified lithium as a potential way to diversify its oil-and-gas-based economy.

One Calgary-based company, a publicly traded junior resource company called E3, has developed its own technology to extract the lithium that occurs naturally with Alberta's oilfield brines. E3 holds the mineral rights to an estimated 16 million tonnes of lithium resource, and hopes to open a full-scale commercial plant in the central part of the province by late 2026.

But Christiaanse said Posco brings global heft to what is still a very new and burgeoning industry for Alberta. He said the company also has the capital and expertise to invest up and down the entire lithium supply chain.

"What we’re really looking for at the end of the day is the end-to-end supply chain discussion, so it’s not just about mining the resource ... it’s about producing it, refining it, all the way to getting it ready for consumer products," Christiaanse said.

"That's where the real value-add is for Canada. If we just export the minerals out of here, that’s not really a win in our minds.”

Posco has been actively seeking to grow its lithium footprint, first in 2018 by acquiring brine tenements in Argentina, where it is currently constructing commercial brine lithium plants with a total capacity of 50,000 tonnes per year.

Additionally, Posco has agreed to establish a joint lithium venture with Pilbara Minerals in Australia and is also constructing a commercialization plant in Korea for hard-rock lithium with a capacity of 43,000 tonnes per year.

Christiaanse said while Posco is the first major foreign company to publicly announce its interest in Alberta lithium, he said it won't be the last. He described the surging demand for lithium globally as akin to a "gold rush," and said the province has been in talks with a number of other potential investors from around the world, in particular from Asia.

"There are others, both in Japan and in Korea, that are on a similar path (to Posco) and we anticipate this being the first announcement of many," Christiaanse said.

This report by The Canadian Press was first published Nov. 8, 2023.

News from © The Canadian Press, 2023