And another aspect is not only for the steel but also the rechargeable battery materials. But as you saw in the IR presentation, you can see that the market condition is not as good as we had expected. So, the profits might further decline for each subsidiaries. So, we are also reviewing all of our CapEx plans, and our CapEx for this year may be slightly reduced compared to the initial plan. So, we will cut down some of the CapEx plans so that it will not undermine too much the operating profit. So, I mentioned about the steel infrastructure and the rechargeable battery materials business plan adjustments that are planned.
Unidentified Company Representative : Yes, regarding the steel market in China and its downturn, everybody is aware of that. And we have to respond to that. And our mid- to long-term strategy is the following. Of course, we’re not at the stage to reveal the specific plans. But as our CSO mentioned in his introduction, with the launch of the new leadership, we’re currently in the process of developing a new global plan, but our competitiveness lies in the cost. So as our Head of Finance also said, we will save and cut costs and at the same time that includes also restructuring of the facilities and plans. Which facility is under review right now? And probably we can get back to you with more details during the last during the next call.
And regarding the Chinese and Japanese imported goods and its concerns, we are aware of that as well. And as for Japan, thanks to the, because of the low yen regarding a lot of imported goods and also with China because of cost competitiveness. But there are also some illegally imported goods from China. So, we want to prevent that. And as for Japan, there are Japan and Korea private consultative mechanisms and there are also volumes of imported goods that have been dumped in terms of prices. So, we want to also present that as well. And as for the steel specification, it’s going towards more the melting rather than rolling. So, we want to also address these types of irregularities and there are constant demands to do so in the Korean cell market as well.
And of course, we have to increase prices as well against this downturn of the market. And the automotive is very much related with the raw materials cost. And in the first half of this year, there were ups and downs of raw materials cost but is slightly on the increase. And the exchange rate, there is a depreciation of the Korean won. So, the price negotiations with the automotive sector, we believe that the formula will be settled to increase the, possibly increase the prices in the latter half of this year. That will be the basic tone of our negotiation. And as for the shipbuilding, as for the cost, we are rebuilding whether we should increase the price and the steel plate, actually price is still low. So, we have to also take into consideration the long-term relationship with the shipbuilding sector.
So, all of that is factored in, in our negotiation with the shipbuilding sector.
Unidentified Company Representative: Let me address lithium. So, yes, our profit loss, was projected based on $30,000 per ton. But yes, we’ve seen a lot of changes now and it’s fallen to $16,000 per ton. And so, we are adjusting our plan based on $15,000 per ton at the moment. So, based on a plan that was based on $30,000, yes, profitability is being squeezed. And to address the, hard rock and liquid-based, separately. First of all, hard rock, how much are we going to be able to acquire this hard rock? At what price? This is a key. POSCO acquires spodumene from Pilbara, and this is the most competitively priced hard rock. And we will be normalizing operations in the next three years. So, the processing cost that we will be working with during, the next 3 years, it’s still competitive against, our industry peers.
Of course, we are not going to be able to match the top competitors, but we have enough to remain competitive. In POSCO Argentina, our Salt Lake that we’ve acquired, this is top quality, globally top rated. So, because there is relatively low impurities, condition for extracting lithium out of this brine is quite good. And once we stabilize our extraction process, I believe we will be able to give you the best cost structure among our peers.
Operator: Next question is from Eugene Securities, Mr. Lee Eugene.
Eugene Lee: I’m from Eugene Investment and Securities. I have two questions. First, in the European market, how are we planning to address the European market situation? And what are some of the progresses that you’ve made in your plans toward the European market? Secondly, the carbon lithium is more expensive than lithium hydroxide, and I believe that you are making preparations for lithium carbonate. And so, I wonder if you’ve changed your plans in any way in this area. So, I think you want us to address CBAM and on Green Steel. So again, Mr. Jeong will address this question as well as Ms. Kim Hee [ph], who is in charge of carbon neutrality strategy. And for the question regarding lithium, I’d like to ask Mr. Lee to address that question again. Thank you.
Ki-Seop Jeong: So, as you’re aware, CBAM has gone into a transition trial period since October last year. And so, we have been mandated to report the carbon content in our products, and we have to, buy certain certifications. And how are we addressing this? So, to minimize risks here, from 2022, we’ve had a designated team to address these issues. And when we make our first report, we will be holding a hearing, and, we will be creating guidelines in both languages, Korean and English. So, these are some of the plans we have. On the 31st of this year, that will be the final stage of the trial period. After that period, we will have to report all of our products. And so, there are challenges we face, and we are addressing them step-by-step.
There are some irrationalities that we need to be able to address and remove, and so we are making these demands to address these issues. For example, some of the differences between ETS and CBAM because the carbon measurement mechanism is very different, and so we’ve made a demand that our way of measuring, unit measurement of carbon emissions be adopted. On green steel and carbon neutrality, let me address that. So, the HyREX pilot facility is, being prepared right now. And last year, the task force team now has, been upgraded to an inflammation team. And in Pohang, we have a development center that we’ve established. At this center, we are looking not only at HyREX, but also into the engineering and low-carbon research. So, from technology to pilot engineering and process development, we are looking at the full scope.
And so, we are on the path to building our HyREX facility on schedule. And in Gwangyang, the Board approved investment in Gwangyang last year, and so we began construction this year. And in February of 2026, we hope to be able to complete this project. 2.5 million ton per year is our planned capacity, and we’ll be using EAFs here in order to address client needs and demands. On lithium, we have heard about the price of LCN, how it has been going up. But in Japan, because LFP is in high demand. Lithium carbonate price of lithium carbonate is much higher than lithium hydroxide. For about five years, we ran a demo plant in Gwangyang and we used LH at the time, and we used this to convert that to LC. Technology wise, there is no issue there, but it’s all boils down to how we look at the LFP market.
So, for new projects, we are looking into producing LC, not LH. So that’s in our plan.
Unidentified Analyst: I am [indiscernible] Securities. So, you mentioned about delaying your investments in rechargeable, embedded materials, and you’re also reviewing the or revisiting the investment for the anode materials. And last year, you mentioned about the plan for a public offering of the PASCO Future M. So, I would like to know if there has been any changes with regards to your plan compared to last year. And the second question is about the steel business. You said that you are going to actually increase the overseas production of steel from 5 million to twice, twofold. So, I would like to know if you have visited the investment plan for the overseas steel production as well.
Unidentified Company Representative: Regarding the rechargeable, so the material, there was a question about the shares offering as well as the anode investments. So, Lee Kyung, from the nickel and next-generation business is going to answer the question. Yes, GM and Volkswagen, not only the OEM manufacturers, but also a lot of our clients, the battery makers, are delaying their investments as well. So, we believe that we also have to accompany that trend as well. And adjusting the production capacity, as for now, is inevitable. So, we are in this inevitable situation to do so, especially regarding the added active materials. We have adjusted it slightly, because as for the natural graphite, compared to China, our cost competitiveness is not very good.
And when it comes to the specific processes, the intermediate processes, they are not established in Korea yet. So up until then, we have to sort of like align our volume with the customer situation. And when it comes to the offerings of the Future M, the timing and date is not yet determined. Whether it’s going to be a third-party offering or if it’s going to be addressed by borrowings, we don’t know yet. So, we are reviewing a lot of options, and probably we’ll be able to achieve decision by sometime in the first half of this year. And the second question was about the steel business plan and its changes. So, it will be done by the Head of Steel Business, Mr. Lee. So, when it, I think that question is related with the mid- to long-term strategy of the Steel Business.
And if you look at the crude steel output overseas, about 5 million ton, and our goal is to double it by 2030. And in that, it’s not much different from the existing plant. So as for the high growth and high-profit markets, we are going to expand our business in these areas. And as for the high-profit markets, it’s like India and Indonesia. And high-profit market will be also North American region. So, these regions with regards to these regions, we will continue with our existing strategy, and we have already executed our CapEx in these regions. So, we’ll make sure that we will ensure a stable supply still, and we are continuing to discuss and strengthen our partnership with the local players. And that will be our direction going forward as well.
Operator: Next question is from Eugene Securities.
Eugene Lee: Thank you for this opportunity. You planned for about KRW10.8 trillion CapEx. And you mentioned last year about KRW121 trillion by 2030. I want to know if there are any changes here and how you intend to finance all of these? And on coking coal, as well as steel making materials, there’s a lot of, market analysis being performed. Will you be making upstream investments? And you mentioned about 70% to be internally sourced. I wonder how you’re going to address that. And, production capacity, could you give me some prospects and how you see future prospects for demand?
Unidentified Company Representative : So, let me rephrase the question. The first was about CapEx and how to finance that and how you will be allocating that to steel and rechargeable battery materials. We will ask Mr. Lee [indiscernible] to respond to that. And then, you mentioned the filmmaking companies that are going through mergers and acquisitions, so how we are looking at that market. And then the third, about internal sourcing of our steel business. And about East Steel, Mr. Hoon will address that question.
Kim Sang-hoon: CapEx? Let me address that question. So, looking at our presentation deck, in 2024 consolidated, accounts tells us that gives us KRW10.8 trillion. This is against 23 numbers about a KRW2.3 trillion increase. Breaking it down into the different business areas, I think that was the question. First, in steel, we’ll be putting about 41% of the KRW10.8 trillion into that. So, about KRW4.5 trillion will go into that and most of it will go to POSCO, the steelmaker. This is to brace for carbon net zero. So, to make investments in electric arc furnaces and to manufacture or increase volume of hyper-NO production and to invest in new furnaces. In battery materials, we will allocate about 43%. That’s about KRW4.6 trillion.
