Prepared remarks
Greetings. I head up the Finance and IR Division at POSCO Holdings. My name is Kim Seung-Jun. This is POSCO Holdings 2025 Full Year Earnings Release. I'd like to welcome the participants, investors and analysts. Thank you. In 2025, we experienced global trade policy shifts and economic slowdown. It was a challenging environment. We put our effort into protecting our short-term profits. At the same time, as a business group, we built the foundation for future growth. 2025 consolidated revenues declined 5% year-on-year, recording KRW 69.1 trillion. Operating profit declined 16% to KRW 1.8 trillion. While POSCO's operating profit margin grew from 3.9% to 5%, we failed to meet our goals due to the accidents at POSCO E&C that led to construction halt as well as the ramp-up costs that entered the books for the new lithium and precursor plants that were commissioned at the end of 2024. The fourth quarter profits were especially weak. The reason was communicated in last quarter's release. Pohang hot-rolling plant and other facilities have gone into major repair schedules, triggering production volume cuts. Also, large volume imports that flooded our market prior to the preliminary antidumping tariffs on hot-rolled products were still being consumed, causing a temporary drop in sales volume. There's more: the divestment of PZSS plant in China caused employee compensation to enter our books, too. This is in addition to the loss incurred by construction stop issued at POSCO E&C. So sizable one-time costs were accounted for all at once. In 2026, we will likely serve out some significant inflection points for POSCO Holdings. First, we have, for some time, studied various ways to go overseas in steel. This year, we'll see some specific actions. Last year, we identified strategic partners, signed MOUs with the U.S. and Indian JV partners to begin negotiations. With these partners, we're in final stages of discussing the terms of our action plan. So this year, we'll be able to witness some action on our long-sought entry strategies into overseas markets. In parallel, we intend to strengthen our core by focusing on high-margin products in the domestic market. Secondly, asset-based lithium operations will begin to generate profit. Our Argentina Lithium Plant 1 will ramp up and begin commercial operation this year. Last year, we signed deals with Australia's Wodgina and Mt Marion mine. The acquisition procedures will complete in the second half of the year, making immediate contributions to group level profits. In the past several years, we completed Phase 1 of our investments involving the purchase of lithium resources, plant building and ramp-up. With commercial production around the corner, lithium prices have recovered just in time. We're excited to enter the next phase of our business when we will begin to generate real profits. By business model, an examination of the sequence of benefits accrued to parties impacted by the lithium price hikes illustrates that lithium ores, a.k.a. spodumene, or Australian hard rock lithium producers will be the first to enjoy the benefits. Next will be the brine-based lithium business in Argentina. Then the lithium processors, namely PPLS, who process the imported raw materials will be the last to enjoy the impact. Third, value chain expansion of the infrastructure business will drive up margins. Therefore, we believe 2026 will show the impact of portfolio management. And as long as we can keep the price at our current levels, we'll be able to see more profit. As a result of the infrastructure business expansion, again, we'll see the impact of our portfolio management reflected in our financial statements this year. Australia's Senex Energy built out its expansion facilities for gas production in October. And in November, we acquired new palm oil production farms in Indonesia. The return on these investments will be fully reflected in our 2026 annual performance. Also last year, PZSS plant in China that registered KRW 200 billion in red ink recently was approved by the Chinese government for divestment. Once the procedure runs through, it will be removed from our consolidated books. Please understand that we're also aware that regardless of the rosy picture, we also have other challenges to confront: stagnant domestic steel demand, formation of global blocks, tariff wars that restrict trade, the weakening won currency that has the effect of driving up cost, and the risk of lithium price fluctuation, to name a few. This year, by taking advantage of the various positive factors on our doorstep, we hope to turn the tide that held us back in the past few years. So we hope this year will prove to be the inflection point. Thank you. Now I'll invite the Head of IR to deliver our 2025 performance results and 2026 business plan.
Page 3. 2025 consolidated operating profit decreased KRW 347 billion year-on-year, recording KRW 1.8 trillion with consolidated EBITDA of KRW 5.9 trillion. POSCO's operating profit grew — from quarter 1 to quarter 3, quarterly operating profit was on the rise with a slight decline in quarter 4 to KRW 12.7 billion. First, POSCO E&C had construction stoppage and bad debt expenses recording KRW 190 billion of quarterly deficit. Second, PZSS divestment is ongoing and employee compensation and other temporary costs were administered, deficit totaling KRW 131.9 billion. At the end of December, Chinese merger approval was completed and the sale will be completed within Q1. Third, POSCO's operating profit recorded KRW 337 billion, decreasing from Q3. Off-season is one factor, but another factor is stockpiling of cheap imports prior to the hot-rolled antidumping measures. And we decreased our sales volume by 6% quarter-on-quarter. Also, Pohang hot rolling line is under major maintenance, so production was adjusted by 4%. With these efforts, market inventory of low-priced imports are balancing out. And from quarter 1, we expect production and sales volume to return to previous levels. In 2026, as our CFO mentioned, restructuring of businesses in the red will show the impact and Argentina Lithium Phase 1 will begin commercial production, and we can expect RBM profits to improve. Last year, we acquired a palm farm, expanded capacity of Australia Senex gas fields and these new investments will also contribute to profits. Page 4. This year, group-wide serious injury cases increased to nine. POSCO Group is enhancing safety systems, increasing employee participation and boosting operability on the ground as priority goals, focusing our best efforts to foster a safe workplace. Last year, we established the Group Safety Innovation Task Force as a CEO direct report and launched POSCO safety solution to strengthen safety expertise. Furthermore, we applied world-class safety consulting techniques to supplier companies. Also, we have outside specialized organizations regularly perform unscheduled inspections. We will continue to share our safe workplace metrics, improvements and actions with you transparently each quarter. Page 5. In 2026, I will describe the key business activities in steel. In 2026, for domestic steel, we will develop decarbonization technologies and promote high-margin products to strengthen our business. In overseas steel, we will establish JVs to drive our end-to-end localization growth strategy. First, to address the carbon-reduced steel market, we will begin construction of the HyREX demo plant in Pohang. Also Gwangyang EAF will continue operation in June. To enhance our profit structure in the domestic market, we will pursue growth in premium steel and specialized products. We will advance specialized capacity at each steelworks. Pohang Works will lead hydrogen, LNG and power grid innovation as leading mill of energy and Gwangyang Works will be specialized for future mobility markets. We will continue to manage these aspects to increase our mix. We will continue to leverage technology to structurally cut costs under Cost Innovation 2030. Finally, 2026 will be the year we act on overseas expansion. In the U.S., we have the Hyundai Motor Group EAF integrated mill project for which we confirmed share participation. Cooperation with Cleveland-Cliffs and the India integrated steel mill project with JSW are also ongoing. Page 6. First, POSCO Argentina's ramp-up is near its completion stage. Generally, South American brine-based plants take two to three years to ramp up, but we have worked with the goal of completing it within a year. Major parts that needed to be replaced had some supply issues, delaying normal operation for two to three months. But by the end of March, we will boost utilization rate to more than 60%. And from July to August, we will be in full operation, meaning it will be our first year of commercial production. Recently, lithium prices increased substantially. Argentina plant owns brine assets, so we have a lot of operating leverage in the face of lithium price hikes. In Q1, we still have volumes remaining for low-priced orders and the utilization rate is rather low, but it will rapidly increase thereafter and profit improvements are in sight. Furthermore, in the first few years of commercial production, production efficiency improves gradually, boosting cost competitiveness. So we believe this can be the beginning of a positive cycle. As for POSCO Argentina Phase 2, considering the brine charge and evaporation schedule, construction is planned to be completed by Q4. Once completed, technical-grade lithium carbonate production capacity will be at 25,000 tonnes per annum. Recently, we acquired LIS brine asset at a competitive price, which will serve as a valuable asset for future expansion. Next, POSCO Pilbara Lithium Solution. PPLS' major clients include POSCO Future M and other domestic and North American customers in its sales structure. However, demand from these customer base has been slowing down, requiring the company to diversify its customers. European and global top-tier OEM companies are among the new customers that we are working to secure. And there are some positive developments. Regarding the recent lithium price hike, PPLS imports spodumene from Australia to produce lithium. Recently, spodumene price increase has been higher than lithium price increase with the spodumene to lithium hydroxide price ratio reaching 11%. Therefore, the higher lithium price has not been an immediate positive factor, and there are some temporary difficulties with margin spread. But in the long term, we expect positive impacts. Third, the JV investment with Australia's mineral resources. Currently, foreign investment approval and merger filing is underway. Once they are complete, the final contract will take place near March and the payment will take place within Q2. Therefore, profits from this mine will be included from the second half through gains on equity method valuation. Once investment is approved for the next four years, the spodumene concentrate price we estimated was around $1,000 per tonne, but currently, the price rose to more than $2,000. Considering the market situation, we expect the mine to immediately begin contributing to gain on equity method valuation. And next year, the impact of the price hike will be bigger. For production volume, cash costs and other basic details, please refer to MinRes website. Meanwhile, to verify direct lithium extraction (DLE) technology, we are investing in the technology. POSCO HY Clean Metal was the first to begin normal operation. And since October 2025, it has sustained EBITDA surplus. Black mass price is on the rise and the supply and demand is tight, but it has confidence in its stable production technology and is discussing opportunities to expand business with global companies. Now for solid-state battery, we are also active on the scene with robust technology development. POSCO Future M is working with the U.S. solid-state battery maker, Factorial, making strategic investment. And POSCO JK SS recently developed commercialization technology for sulfide solid-state electrolyte mass synthesis method, which gained recognition. Page 7, portfolio management update. 2025 was the second year of restructuring. Including the divestment of all NSC shares, 28 projects were completed, generating cash of KRW 1.1 trillion. Thus, since 2024, we have generated cumulative cash of KRW 1.8 trillion. We aim to continue restructuring 55 additional projects by 2028. This will generate KRW 1 trillion of cash. Page 8, CapEx administration and plan for this year. Last year, RBM Phase 1 investment was nearly completed. Thus, the total consolidated CapEx administered fell to KRW 7 trillion from KRW 9 trillion in 2024. This year, in addition to the lithium investment, we have also reflected the budget for upstream investment overseas, which will temporarily increase the CapEx size. Next, performance by operating companies. First, POSCO. POSCO's operating profit improved from the previous year, with an operating margin ratio of 5.1%. So we believe that our profitability enhancement has taken place. Q4 price increased from Q3, but coal unit price rose, leading to high raw material prices. So the mill margin fell moderately on quarter. The low-price import market inventory adjustment efforts led to sales volume falling to 7.7 million tonnes, putting pressure on profits. But this year's Q1 will see sales volume return to previous level years, and we plan to raise the selling price of some products. The effect of price increase will show from Q2. In 2026, we expect EU and other countries to strengthen protectionist policies and challenges will continue. But by expanding sales of high-margin strategic products, and accelerating global expansion strategies, we will do our best to continue to turn profits. Page 9, overseas steel. As for overseas steel profits, despite a weak global market, we optimized our marketing strategy and cut costs, improving our profitability. PTKP in Indonesia expanded export to high-margin European markets, which improved profit structure. And POSCO Maharashtra in India increased ratio of auto sheet sales. And PY VINA in Vietnam also shifted to profits in 2025. But if you look at Q4, it showed KRW 135.9 billion of deficit. This is mainly from PZSS, which is undergoing divestment. It will be excluded from consolidated data in 2026, which will lead to decrease in deficits. Page 10, POSCO Future M. Last year, energy materials, including CAM and AAM saw revenue decline from slowdown in EV demand. But by boosting efficiency and cost cutting, we kept the level of operating loss similar to the previous year. And next, POSCO International. In 2025, energy and materials trading both demonstrated higher operating profit recording strong performance. Last October, Australia Senex Energy production expansion was completed. And in November, Indonesia palm farm was acquired, which will contribute to additional profits this year with forecast for profit growth. Next, Page 14, POSCO E&C. Last year, POSCO E&C had the Shin-Ansan accident loss recognition, additional costs from suspension of construction and losses from overseas projects. These one-off costs and bad debt expenses were reflected recording a sizable deficit. However, we anticipate a turnaround to profit in 2026. This concludes the overview of POSCO Holdings performance. We will now have Q&A. Thank you.
Questions and answers
The first question is from Hyundai Motor Securities, Mr. Park Hyun-Wook.
My name is Park. According to your presentation, POSCO's performance is looking pretty good this year. I have three questions. The first one is regarding the steel market outlook. In the first half in automotive and shipbuilding, major demand industries, what are some of the negotiations that you're looking forward to? What do you expect? And some of the Japanese and Chinese hot-rolled products posed some challenges last year and some of the impact of those products will manifest in the first half of this year. So when will we begin to see POSCO's market share increase? Secondly, lithium prices have been rising significantly — it's about $18,000. How do you forecast the lithium prices for the rest of this year? And based on current price levels, Argentina salt lake as well as hard rock lithium, what do you think about their prospects? And this year, I think some of the construction is continuing. Currently, when can we expect to hit break-even? Third question. You have invested as POSCO Holdings in lithium mines. You're also investing in India and North America. So there are a lot of sizable investments being made. But I think there's still lingering concern about a potential HMM acquisition in the market. So we are watching this. We'd be really curious to hear what your position is. That's all of my questions.
My name is Marketing Strategy Officer at POSCO. So in the demand industries such as automotive and shipbuilding, you asked about the market outlook. Here's my answer. The global steel market will see some appeasement from China. Because of some other expansion plans, I think we'll see some improvement, but we'll see differences by region. In China, the real estate market is still in a recession. So this year, steel demand is likely to continue to decrease, and they will experience negative growth. But in Europe and the United States, they have already hit their base point, so we believe that they will be recovering. But because of policy uncertainties, whether demand will actually increase we will have to wait and see. In the emerging economies in India and the ASEAN countries, we will see some strong demand increases. In India, in particular, because they're increasing manufacturing as well as infrastructure building, I think we'll see strong growth signals in 2026 as well. In the domestic market, we'll see disparities by industry as well. In shipbuilding and defense as well as power industries, we'll see strong growth continue. But in home electronics and construction, we will continue to experience recession. In automobiles, tariffs and some of the sharp demand decreases will continue to pose challenges. And so there will have to be a little more time before we can see recovery. On price negotiations with the auto OEMs, since last year, tariffs have become an issue. So against the negotiation formula, they are asking for additional discounts. We are going to try to stick to the formula as much as possible. For shipbuilding companies, because they have a stable supply of orders and because they are trying to dominate or take a larger share of the market, we will take that into consideration when we negotiate with them. For the hot-rolled antidumping tariffs, what kind of impact can we expect was your question, I believe. I believe the flat products saw a decrease of about 300,000 tonnes in the fourth quarter against the third quarter of last year. But we believe that the flooding of these products into our market has come to an end. And by March or April, we'll be increasing our selling prices. And the impact of these raised prices will begin to show in the second quarter and beyond. So we'll continue to make these kinds of efforts.
On lithium price, industry brokers have refrained from publishing official prices, but some forecasts suggest $20k per tonne, so it will be similar to the current level. Chinese inventory is not increasing, so this price doesn't reflect inventory accumulation; it's actually reflecting actual demand. For about two years, lithium prices have fluctuated and we went through a harsh cycle. Looking back, we saw a high around 2018, then a fall, and then prices began to rise again for about two years. By the end of last year, prices dropped and then rose again; this rise is only about three months old. Based on past lessons, I think we will see it continue to rise, but we must be very careful here. I cautiously forecast continued upward movement. In Gwangyang and Argentina, we were deep into ramp-up in both locations, so no profits there yet. We will go into commercial production this year; in particular in Argentina, in January and February, we had issues. A membrane component was in short supply, so in January and February, our volume did not hit our goal. And because we will be shipping out orders we committed at lower prices, those shipments will not generate much profit initially. So because of component supply issues and low-priced contract deliveries, we will not be generating significant profit immediately. But as plants are certified and customers, including automakers, visit our Argentina plant, we hope to turn this tide this year. Regarding Pilbara hard rock lithium, ore lithium price is important, but raw material price is just as important. Spodumene price is a key input. Because we need seven tonnes of hard rock spodumene to make lithium hydroxide, 30% to 40% of raw material price factors into our cost formula. Recently, spodumene has increased substantially — lithium hydroxide is about $19,500 and spodumene is about $24,000, up roughly 17%. Using seven tonnes, the cost of raw materials will be about 80% of our total cost structure in that scenario. So this price increase needs to hit our books in a timely manner for us to generate meaningful profit. How this will reflect in our books depends heavily on the spread between spodumene and lithium prices. But we can predict that our loss will be much smaller than last year. We will engage in diverse activities to enhance profit. On the HMM acquisition, we've already made public disclosures on our position, and we've consistently said that this is in preliminary review stage. There are no specific decisions that have been made. Since then, there has been no progress. So that is the clear answer to your question.
The next question will be from iM Securities, Kim Yoon Sang.
I am Kim Yoon Sang from iM Securities. I have a few questions. The first question I'd like to ask is regarding steel and also infrastructure, POSCO International and E&C and the related businesses: I would like to ask about the business plan. Specifically, what kind of market situation you are referring to? And the second question is more detailed questions about your business plans in RBM. There are some parts, for example, canceling of orders and difficulties with hard rock lithium — compared to last year, do you expect things to improve this year? I would like you to specify. And for the third question, you provided more than KRW 6 trillion in terms of CapEx. I wonder if this needs to be adjusted downward. And finally, Cleveland-Cliffs, you mentioned partnerships. And recently, the strategic investment, are there any considerations that you're making?
I will answer the second question first. What will improve is the lithium price increase, and the negative factors are maintaining North American customers where orders have been on the decline, so we are exploring other customers. Spodumene prices are also a negative factor. Whether this leads to improvements will depend on our operating performance, but we expect things to improve greatly compared to the previous year. Especially POSCO Argentina is expected to perform very well and operating profits to improve sizably. Regarding profit guidance, in steel, we expect POSCO to do a bit better than last year because there are several factors. Exports can be a little challenging, but the domestic market is improving. So compared to the previous year, we expect improvement. In overseas steel, compared to last year, around KRW 200 billion of deficit will be removed because PZSS will be excluded from consolidation, so we expect improvement as well. In infrastructure, consider two factors: first, the acquisition of the palm oil farm — more than KRW 100 billion of profit may occur from the palm farm, though the incremental profit may be a bit below KRW 100 billion. Second, we had KRW 540 billion in losses in construction, but we are hoping to see about KRW 100 billion profit this year. So the size of profit gain in infrastructure should be meaningful. In rechargeable battery materials, lithium price fluctuations define a lot of our business, but the deficit we experienced in Argentina last year was about KRW 100 billion. Although impacted by lithium prices, if the current price is maintained, I think we can definitely get to break-even, perhaps a little more, perhaps not in the first quarter, but with these assumptions, we can look forward to improvement. At Pilbara Lithium Solutions, in 2024–2025 we had losses as well, but we'll be able to compensate for that. When these factors pan out, we think we'll definitely turn the tide. Add all of these numbers up, and you will see pluses and minuses, but generally speaking, we expect a better consolidated number. For the CapEx question, we mentioned more than KRW 6 trillion will be invested in steel; the India integrated steel mill project will take up around KRW 400 billion and the U.S. blast furnace (or integrated project) will be another sizable amount. HyREX plant and other investment will total KRW 6.8 trillion. Additionally, in steel investment, this is our budget and includes planned overseas investment; execution may be adjusted as negotiations progress. In the consolidated KRW 11.8 trillion plan, all of this is included. Last year, we talked about KRW 8.8 trillion, but actual execution was KRW 7 trillion. So as we continue negotiations, adjustments can be made.
Regarding rare earth and considerations with Cleveland-Cliffs: we are cooperating with Cleveland-Cliffs focusing on steel. At the last IR, Cleveland-Cliffs announced items regarding rare earth, but regarding rare earth cooperation, we have not made any internal reviews.
The next question will be from HSBC, Park Yushin.
This is Park Yushin at HSBC. I have two questions. The first one is on the lithium business. U.S. automotive OEMs are electrifying. So for POSCO's lithium business, are there some target clients in the U.S. as well as business targets in the lithium business for the U.S. market? Next is on steel. This Saturday, I believe there were some proposals made by BlueScope and NSC was involved. If you have any updates on this, I'd like to hear more. And any strategies regarding the steel business you can share?
On automotive OEMs, yes, there is a slowdown in electrification in the U.S. This year, LFP will see about a 30% increase while NCM will likely stay stable. For cathodes and Pilbara Lithium Solution, because their customer base has been predominantly North American, we are shifting more marketing efforts toward Europe. We are working to secure European and global top-tier OEMs to diversify our customer base. For POSCO Future M, we will focus on LFP. In the lithium business, we will focus on lithium carbonate. Mid- to long-term, our lithium capacity target is 100,000 tonnes, so we want to establish a broad client base to exhaust this capacity. Because we've made new investments in hard rock lithium, we will review facility expansion, but no decisions have been made on schedules. Regarding profitability outlook, the mine we acquired will be accounted for using the equity method. In 2027, we are planning additional production volume, which will make the valuations more meaningful. On the BlueScope question: Australia's BlueScope equity shares proposal. Currently, POSCO and NSC have a consortium with BlueScope to acquire the Whyalla Steelworks in Australia. We have not had any discussions about acquiring BlueScope itself. On China's steel restructuring: to respond to criticism about oversupply, China decided to adjust policies — for example abolishing export tax rebates on certain products and announcing measures to constrain exports of low-priced, low value-added products. But because the Chinese domestic market is in recession, we believe some of these export volumes will continue to be limited and we expect some positive signs for other markets.
The next question will be from Hana Securities.
I am an analyst from Hana Securities. I have three questions. First, EU's CBAM and other global export regulations will be in place — how much impact will POSCO take and how will you address this? Second, regarding lithium, you mentioned that you expect profits for the lithium business to improve. Are there any specific volumes that you have forecasted for sales and production? And finally, there were a lot of safety accidents within the group. These investments and costs related to safety, do you expect them to go up in the future? Will they have a meaningful impact on profitability? Can we believe that safety has been secured?
Regarding EU CBAM, it will come into force from October. Currently, we are in discussions with EU commissions regarding national quotas, and we are doing our best to secure an advantageous position. We must assume that quotas will decrease, and therefore we may need to remove low-priced products from our export mix and redirect that volume to Central and South America and other markets. Next year's steel sales policy will focus on the domestic market, and we will focus on premium products overseas to complement some of these losses and maintain similar levels overall. For the second question, sales volume is expected to be 55,000 to 60,000 tonnes for the business referenced. Our plan is to secure enough customers to sell this volume. This volume is roughly twice that of last year. Our basic plan is 55,000 to 60,000 tonnes, but depending on market conditions in the second half, we will review whether we can increase this volume.
Regarding investment and costs for safety and whether they will increase in the future: the facility and other investments being made to improve group safety are not low compared to other companies. Enhancing facilities and putting safety equipment in place will not require mass scale new spending; we may need to improve bit by bit, but it should not impact profitability materially. The investments we have made in safety are higher than peer companies. I don't believe accidents happened here because we didn't make enough investments. Regarding smart safety technology: many technologies are discussed globally, but few have been applied practically on the ground. We are leading the industry in applying practical safety technologies. Technologies that actually save time and effort to enhance safety are being rolled out, and we are making efforts to apply them. So we don't believe that making these safety investments will significantly impact profitability, and we will continue to improve safety levels.
The next question is from DB Securities, Ahn Hoe Soo.
My name is Ahn Hoe Soo. I have two to three questions. First, the steel business rationalization and restructuring have been discussed. Do you have any specific plans? Next, on lithium: you talked about brine-based lithium plant 2 and technical grade production. If you want to make the shift to battery-grade lithium, what kind of additional CapEx would you need to expand? And regarding the lithium price increase, what is the rationale behind that? If you have more information on why it's rising, that would be helpful. Third, you're investing in HyREX and you will soon operate the electric arc furnace. Looking at the group-wide energy mix, what is your plan? And POSCO International has plans to import 1 million tonnes of gas from Alaska. What implications does this have for the group-wide business?
I'll answer the question on price first. The price is rising sharply for three main reasons. First, the abolishment of the export tax rebate in China removed incentives and changed trade flows, creating some excess demand elsewhere. Second, recent growth of the ESS (energy storage system) market increased actual demand. Third, expansion constraints in Chinese salt-lake production and some temporary mine closures reduced supply. Those are the key rationales for the sharp rise in lithium price. Regarding grade conversion: our brine-based product is technical grade (roughly 99% purity). To move to battery grade (around 99.5%), equipment to reduce impurities and refine the back end is required. We are studying options such as transporting lithium carbonate (LC) from Argentina to Gwangyang and converting to lithium hydroxide (LH) or further refining. There is a plant called PLS that's almost completed; by injecting CO2 in the process we can convert to LC, and the additional refining to LH is relatively small CapEx — essentially tweaking the last part of the process. We will review and potentially decide within the first quarter.
On steel industry restructuring: for pipes and long products, there have been talks about rationalization and downsizing, but no large-scale closures of blast furnaces or creation of new ones. There is no imminent oversupply in those segments, so this is not an urgent need. However, we do need to consider this for the future. We are in discussions with industry groups such as KOSA and K-Steel to forecast when or if restructuring should occur. In line with industry changes, we will retire older facilities where appropriate and have already implemented some equipment restructuring. If we see more facilities that are inferior relative to market trends, we could consider additional investments such as further HyREX capacity.
On the carbon neutral and energy mix plan: we have announced NDC 2035. NDC 2030 for steel is a 5.3% reduction target and is achievable with current technology. For NDC 2035, we need to reduce more, so equipment transition is required. At POSCO, both blast furnace-based CO2 reduction and electric arc furnace (EAF)-based CO2 reduction are our two-pronged approach. In 2028, we will complete the HyREX pilot plant and the energy used will include cracked LNG and potentially pink hydrogen. After 2030, we are in discussions with the government regarding the use of nuclear energy as part of our decarbonization plan.
Regarding the Alaska LNG project: the potential 1 million tonne LNG import volume has been agreed in principle, but we haven't signed a contract yet. The terms being discussed are favorable, but we are under NDA so I cannot share more detail. On implications for the country's energy mix: POSCO International would import LNG for power generation, and POSCO could procure LNG through separate channels, so POSCO International imports would not necessarily change POSCO's direct LNG purchasing costs. The two entities operate independently for procurement. The import of relatively inexpensive LNG will add efficiency to POSCO International's power generation, which will assist POSCO International meaningfully. As clarification, CP2 has not yet completed construction. Our capacity cap is 67,000 tonnes and this year we plan to sell 50,000 tonnes, which is still roughly twice last year's volume — I wanted to correct that point.
The next question is from KB Securities, Choi Yong Hyun.
I'm Choi Yong Hyun from KB Securities. I would like to ask about lithium. You mentioned 50,000 as the lithium volume. Does this include Pilbara? The margin spread is a bit wide, so I'd like to ask about your final figures.
The 50,000 tonnes plan will be split about half and half between Pilbara and Argentina.
No additional questions. Since we don't have any additional questions, I'd like to conclude the earnings release for 2025. Thank you very much for your participation. Statements in English on this transcript were spoken by an interpreter present on the live call.