POSCO Holdings Inc.

Marketing Strategy Office. So you asked a lot of questions. If I miss out on any of the questions, then please let me know. So first of all, as you said, in the first quarter, because of the Russia and Ukraine crisis and the global inflation, the coal and nickel prices soared. And in the dispute region, there was the explosion of the mills, so that actually impacted the supply. So that also led to price increases. And in line with that trend or situation, POSCO in the first quarter until February, we actually signed a contract on the fourth quarter of last year, and we could not actually reflect all of these price hikes. But from March, we were able to reflect them in the cost, and in the second quarter, as for the automobiles, and so forth, we have completed the price hike, price surge. And as for the electronics, we are going to, we have actually completed until for the second quarter. And as for the three shipbuilding companies, we have not finalized this yet. So this week, we're going to actually finalize the prices at a reasonable level. And as for the stainless steel business, as you may well know, The nickel prices have gone up to $100,000, and it is a record high, unprecedented. But basically, we believe that we increased actually... The increase of nickel price will... Allow us to preserve our profitability level next quarter. And next month, we believe that there should be... Compared to the one Q, in the second Q, we believe that the price will go a little bit lower, but it's not going to be as worrisome as you may think. It's not going to be a huge drop in prices in the second Q. So regarding the third question, I think it was about holdings subsidiary and the grandson company and the potential. There are grandparent companies that have high potential. If they become subsidiaries, would that not boost the enterprise value of Cisco Holdings? And that was the question. Another question was, do we have any plans to do that going forward? Actually, the reason we transitioned to a holding company is because we wanted to have a fair assessment of our enterprise value by the market. And that is why the subsidiaries and grandparent companies under Postco Holdings and the adjustment of restructuring of the governance structure and ownership structure, we are thinking very hard about how to So this is something under very deep investigation by our company. So once it is decided, we are going to communicate that to the market. And as for lithium and other businesses, we believe that today this business will indeed boost the value of holdings in the future. And if this business becomes like part of a grandson company and if Next, we would like to hear

Kim Yoon-Sang, High Investment Securities. Please ask your question. Yes, hello. My name is Kim Yoon-Sang from High Investment Securities. Thank you very much for the presentation. I have about three or four questions. The first question is on raw fuel and how the supply is for that and also with the ties Improving between China and other countries and with the supply situation in Europe and etc. Can you tell us a little bit about the supply chain and supply situation for your side? The second question is on the export situation for U.S. and European markets. If you can elaborate on that because I understand that the Russian quota has decreased and this means that the sales volume or the quota for POSCO might have increased and I know that the price has been increased gradually recently, but perhaps because of a lower demand, perhaps people might think that the price is not going to be elevated further. Can you tell us a little bit about the market situation right now and your export outlook? The third question is on lithium. Right now, I know that in Argentina you have the commercial plant that is Entering into construction and there are negotiations right now for possible 20,000 tons supply that you are entering into with the local community. I think that there might be some cause for uncertainty. Do you think that you can actually have supplies of upwards of 110K going forward beginning in 2024 and on? My last question is on CO2 emissions reduction. Do you have visibility or guidance on scrap metal usage for last year and also this year as well? Thank you very much for your question. First on raw coal and raw iron. For raw iron supply, I think that Seola Ji-Won of the head of the raw materials office can better understand. Yes, my name is Seo Ji-Won of the Raw Materials Office 1. In terms of raw materials, particularly raw steel, Russia's supply takes up about 14% of the global supply, about 45 million tons. Of this 45 million tons, it is not 0% that has come into the market. Russia is also a net importer of about 10 million tons. So if you minus that from 45 million, we expect the impact to be about 30 million or so. And here, for Bituminous and PCR coal, I think that there is a lot of dependency for Europe. But right now, we're seeing a lot of rebalancing at the market for Europe and South American steelmakers. Because they are unable to purchase from Russia, they are importing from U.S., Canada, and China, India, and Turkey are... Having access to cheap supply from Russia. Because of this, in April, Europe has issued an import ban on Russia's supply. And beginning in August, an outright ban from Russian supply. But actually in the markets, we have already seen this priced in already, even with this month as well. This means that following May, we understand that Australian supply is going to enter into the markets, leading to expanded supply in the market. So right now, given the current price, we believe that it is going to stabilize somewhat, and in the future, it is going to become even more stable down the road. That is all. For a second question, on steel, talking about U.S. and European market possible export expansion into these different markets, Because of the situation from Russia, with the quota decrease from Russia, that this might have a positive impact for POSCO in terms of our exports to U.S. and Europe. And also, the additional question was on the price peak that the analyst has seen in the U.S. and European market. Perhaps Mr. Om Ki-chun of the Marketing Strategy Office can answer to this question. My name is Om Ki-chun. Yes, my name is Aum Gaitan of the Marketing Strategy Office at POSCO. First, the question was on U.S. and Europe on possible peak price in these different markets. Because of the Ukrainian-Russian conflict that is becoming more prolonged, as the analyst has mentioned, we believe that right now the price has peaked and it is maintaining at those levels with the U.S. trade wars, with the lifting of the tariffs. Some of the supply in Europe is coming into the U.S. market, so this is leading to a weak price for the market overall. And for EU, as the analyst has already mentioned, direct exports to Russia is minimal for POSCO, with the year quota about $40 million. And there's a global quota that is already open for us, which means that for February and March and so on, we have... managed to increase HR hot-rolled steel into the European market since then. The third question was on Argentina, lithium commercial plants construction for the Argentina subsidiary and the possible supply expansion in the future if we can have increased capacity from Argentina, if there is any possible uncertainty for the capacity expansion. Perhaps we can hear from Holdings side, Mr. Lee Kyung-Sub, who is the head of green infrastructure business.

Ladies and gentlemen, my name is Lee Kyung-Sub of the green infrastructure business.

Regarding the Argentina lithium business, we already have broken ground for 25,000 production capacity. And as of March 20, in fact, the CEO visited the groundbreaking ceremony and attended the ceremony in person. From Selta to Cartamarta to these territories, we also invited many different heads of these local municipal governments to come to the groundbreaking ceremony. The local governments have the licensing rights and the permits. We have received all the necessary and relevant licenses and permits from these different municipal governments. We are now going into the engineering stage for the construction. We are hoping to break ground beginning, start actually construction beginning this year. We will continue to have deliberations with the head of the municipal government so that we can complete this on schedule. We have finished the environmental impact assessment and we believe that we are going to get all the necessary permits by the end of this year. So that we can begin construction of a possible production supply capacity for about 20K or 20,000 by the end of this year. We don't expect there to be a lot of uncertainty when it comes to the scheduling of the production. And from Umberto, we are going to have a production of about 10,000 by about 2030. With the infrastructure, we are looking at the lots, the lands, the roads, and all the different infrastructures. So because we have cleared away much of the infrastructure, and we are nearing the EIA, and we're almost close to receiving all of the permits and the licenses, because we have good relations with the local community and the municipal governments, we don't believe that there's going to be extra challenges down the road. The Salt Lake profitability is much higher than the mines, so... We are hoping to get access to these salt lakes, which is why we're also entering into more market research in Argentina and looking for possible candidates. As for the last question, it was on CO2 emissions reduction, on the use of scrap metal, scrap iron, on possible guidance in the past and also going forward. Forward guidance on the use of scrap iron. Perhaps we can hear from Jeong-Pong Su. If we can hear from Mr. Jeong-Pong Su, who is on the line from Pohang. Yes, hello. I'm the head of Steel Production and Technology Strategy Office at Pohang. You are possibly asking about the scrap metal used in terms of carbon neutrality for scrap iron, including all of the scrap that comes from all of our furnaces. We are using about 6.5 million tons thus far and this is going to change gradually down the road because according to the carbon neutrality goals by 2026 we are going to have newly installed capacity not just in Gwangyang but also in Pohang. So after 2030 on we believe that there's going to be additional about 5 million Next is from NH Investment Securities, Mr. Chan. Please go ahead. Hello? I would like to ask a follow-up question regarding the question that was already asked.

Regarding the price hike, so you said that you finalized price increase other than the shipbuilding sector, but what we want to know is that you have to, you know, increase price, but would that be you actually increase the price, but did you really actually reflect all the costs and support? Was that sufficient? So do you believe that it's a sufficient level of increase? That's the first question I would like to ask. And the second question was about the question regarding the U.S. and Europe, but with the steel cut in the output cut in China, that may also have an impact on us. So how do you see the impact? And next one is about PESCO Energy. The power generation profits increased a lot, but the government's actually policy So regarding the utilities fee hike increase, I think that the government is not very willing to do so. And I would like to know if that kind of trend is going to continue going forward. And as for Postco Chemical, so if you look at their revenue of QOQ, it has actually decreased. Why did that happen? And the operating margin, profit margin is about 3%. Business is going up, and revenue is going up, and it seems like the profitability has gone down. So maybe you have failed to include or reflect the cost, or maybe it's because it's just a natural process of expanding your capacity. And absolutely tune business. I would like to know about its profitability because as for brine, you know, we secured brine so we can say that we have from the iron and so forth. But what Gwang-Yang is doing as for the, do we have to go towards like a smelting company? Is there other types of logic that we have to take into account to generate profitability? And as for POSCO International, you also mentioned about the agribusiness, but because of the food price hike and the grain price hike and so forth, I think the agribusiness is not very much related with the materials business. So you have to actually make a full use of the capital. And I would like to know whether you're going to continue with the material business in addition to the agribusiness. So I would appreciate a brief answer for each question. Thank you very much. So maybe we can be brief with our answers. So we would like to know if the price increase is enough compared to the cost, actual cost. So my name, I'm from the marketing office. So as for the price increase, as for raw materials, actually it takes two to three months of lead time for that to be fully reflected. So we cannot really say that it has been fully reflected, but we believe that it has been amply reflected. And as for the shortfalls, there's the cost savings that we have to do and we have to fill up with. And as for the steel output cut by China from first quarter, We had expected that to happen, and we actually diverted about 40,000 to 50,000 tons towards the EU. And in terms of supply, there is the Ukrainian and Russian crisis impacting, and China is pushing ahead with its carbon neutrality initiative. and the export-oriented policies have been rolled back and that could actually act favorably towards our company. And with the prolonged COVID-19, as you may well know, because of the monetary tightening in the U.S., that also may pose as some concern for us. And as for the third question was about the first quarter So, Mr. Kim Sang-Yong from the POSCO Energy Corporate Planning and Finance Office will explain. Sorry, POSCO Finance Office will explain about this. So there are two drivers of profitability for POSCO Energy. So first of all is the power generation, and the second is the terminal, LNG terminal business. And in the first quarter, our profits were good because as per the power generation, because we have entered the peak season, and recently the LNG prices soared. So following that, the S&P, the system marginal price, actually also increased about 55% year-on-year. So that led to increased revenue and increased profitability. And the second is our terminal business. And as for terminal business, there is the LNG terminal in Gwangyang that generates stable revenue and profits. As for the terminal business, we believe that the profits will remain about similar. But as for the power generation business, as I said, you know, KEPCO is seeing a lot of deficits and actually focused on KEPCO. A lot of JNCOs or the private independent IPPs are also making efforts. And we are trying to, we will try our best to defend the price. But there will be also limitations, so we will closely monitor the trend and we will try to make sure that we remain profitable. But as per our second quarter outlook, as per the power generation sector, we have a clear distinction between off-season and peak season. Q1, the S&P was high because of higher raw material prices, but in the second quarter, So even though the raw material prices are high, there is the BP, which may go down. So in the second quarter, we may not expect as much profits as first quarter. Thank you. So first question is regarding the anode materials revenue, which declined a lot. And what is the outlook for the anode materials? So, Postcode Chemical's Mr. Lee Hyung-Soo is going to give the answer. Hello, I'm Lee Hyung-Soo, Postcode Chemical Corporate Planning and Finance Office. So, our operating profit margin was quite high last year, but this first quarter, it drastically declined because the magnesium Material prices went up. Raw material prices went up. And as for the increased raw material prices, this has not been fully taken into account. So in the second quarter, we believe that this increased magnesium prices will be reflected in the product price. And as for the anode materials, as you may well know, we Most of the armor materials are actually owned by China and they have a lot of competitiveness in this area. So even though the add-on material prices have gone out because there is a lot of low price volumes coming from China, that is having an impact on our product prices, our sales prices. So that is something to take note of and that is undermining our competitiveness. But in the second quarter, So we're going to also invest in Injolike. So that in the second quarter, we're going to go for a long-term contract with the three top players in the domestic market. So if that happens, then we believe we'll be able to normalize our anode material business. And as for the cathode materials, in the past, the profitability was about 2% to 3%. This year, about 5%. So there's an increase of sales. So the raw materials supply plan, if that is actually materialized at the post-coholdings level, then I believe that that will also boost our profitability for going forward, for post-cochemical going forward. So the fifth question is about the ores profitability. Is that in the lithium or in smelting? Last week, lithium price was about $75,000. But to mid to long term, the lithium supply will be tight, continue to be tight. So we believe that there's a price outlook about $35,000. But as for lithium brine, our projection is about $17,500. And depending on the lithium price outlook, we believe that the profitability will be changed. And as for the... But since the LH prices go up, As for the lithium ore, if the lithium price goes up, then the ore price will also go up. So if the lithium goes up, price goes up, then the profitability will also go up. So I mentioned about the mining and the smelting, and the profitability is both going up because the lithium prices are going up. So in terms of profitability, I think that there's not much concern. And the last question. was about our agribusiness. Should that be included in the POSCO? Should that be actually included in our business? Should we really adopt the food agribusiness and its connectivity with the materials business is very low. So after transition to a holding company, we mentioned about our mid to long-term strategy and we had a lot of discussions at the board. And POSCO International basically is like a total trading company. And after that, it also has added its energy business focusing on the Myanmar market. But the simple or pure trading business has actually streamed generated like revenues. So POSCO International's trade business has We've been focused on the agri-trading as well as materials. We believe that the agri-trading has a good business outlook, and given the food security situation in Korea, we believe that the agri-business role will be adequate for the POSCO International to assume, and a lot of discussions have been made. And of course, simply trading food may require some expertise. And we may need like infrastructure, like terminals, or we need to have like equity stake investments in like farms and so forth. So these are some of the options that we're exploring to further expand our agribusiness and that is our mid to long term plan or strategy. And regarding our agribusiness, we will make sure to expand it further. Thank you.

Next, we would like to hear from Lee Jae-Kwang of Mirai Asset Securities. Please. Yes, hello. My name is Lee Jae-Kwang from Mirai Asset Securities. I also have about three questions that I would like to ask the company. For nickel, if we go into a little bit more of the specifics, I understand that you have two projects that you're planning right now. For the SNNC, you are trying to go from ferro-nickel For batteries and for Australian business, you are trying to go to MHP ultimately, to MHP refining. Is this correct? Is my understanding correct? And also for nickel, when it comes to carbon emissions, there are many people who are saying that nickel is not necessarily environmentally friendly, that there is some controversy regarding nickel as a raw material. What is your stance on this issue? And also for Ravensorp, R&O, my understanding is that this was a landmine that was closed in the past because of low profitability, but it is in operation again. What is its BTC cost if we can have access to this? And also for lithium, I think that you touched upon this issue in the past, but again, with the price structure, For pricing, are you very flexible when it comes to pricing, depending on the cost of the raw material and etc.? Are you going to continue to play it by ear going forward? And also with lithium, again, I think that there was talk about this in Salt Lakes, but the way that it vaporizes, in the past it was natural, and however, POSCO was able to develop an artificial kind of, Thank you very much for your questions. The first question was on Nicole, SNNT is trying to go beyond steel and to go from refining and for Ravensorp is trying to make this intermediate material called MHP. Your understanding, sir, is correct. RNO's cash cost, I think, was your other question and on nickel melt. If the nickel melt method is actually Whether or not it is environmentally friendly. Regarding this, I think that Lee Kang-Sub can respond to this question. In the green infrastructure business, there was a lot of questions from this. You asked questions about the nickel side and also for R&O. If I were to elaborate on nickel, first of all, as the CSO has mentioned, The wet method is used, the wet process is used for MHP, and SNNC creates nickel melt because it uses a dry process. As for environmentally friendly, or whether it's a green material or not, for Ravensorb, they have a plant that creates Thank you for joining us. I think it is just 50% of the emissions compared to the existing method. So we actually think that there is great strength on this process. Regarding Ravensorb, my understanding is that the cash cause was maybe 11K. I might not be sure, but at the end of last year, There were additional mines that were developed nearby, and beginning in January, this new mine was operational. We looked into the earnings performance in March, and the OP was about 52%. The operations, utilization, and production were all going well, quite smoothly, so we actually think that the R&O operations are quite competitive. It's our understanding. And for lithium pricing, you asked whether we continue with very flexible spot pricing or not. The market is continuing to fluctuate, as you know. The package producers and suppliers have tried to enter into long-term offtake with lithium for about three years and even longer, but much of these have come to term. So for the new lithium prices are really being Very flexible. They continue to change all the time on a spot market basis, depending on the market demand. Another thing is on POSCO's production method. For ore lithium and other lithium materials, we are using the POSCO proprietary technology, and for mine lithium, We also use existing technologies that are used by other competitors such as in China for chloride lithium as well. We are using an absorption type of methodology, a new kind of production process that is very much in keeping with the intensity of our brine of the salt water. And so we have different kinds of processes that we use and switch according to the needs and the conditions at the time for brine lithium. There is a time it takes for vaporization and there is the purity that we have to look at. But in terms of production, it is very helpful for us to work with many different kinds of production processes so that we can experiment to continue to come up with optimal processes for lithium production. I'm sorry, I don't recall the last question, but if I have missed your question, please let me know. For our financial guidance, the analyst has mentioned that it hasn't changed since last quarter. For the first quarter, we were not able to revise our consolidated guidance. We're going to work on this in the second quarter, so for our next earnings call in July, we can provide you with the revised update on the forward guidance. Thank you. Thank you very much.

Next question is QIUM Securities, Mr. Lee Jong-Hyung. Hello, I'm QIUM Securities. I think given time, I'm going to ask two short questions. First is regarding OP. So there's a consolidated. And if you actually compare with the 4Q, on a consolidated basis, it's about $1,000. 150 billion won, but Panberry says it's about 400 billion won lower. So if you look at the detailed performance of the subsidiaries in green infrastructure, you can see that there's an increase of about 200 billion won, and then there's not much increase in the first fourth quarter. So it seems like 160 billion won is there's a gap of 160 billion won so is it because of how you actually recognize the dividend payout or is there some kind of adjustments why is there a gap of 160 billion won and the second question is about the cancellation of shares the treasury stock that was mentioned by the chairman and there's also a media coverage about that. So in the first half, do you have any plans to cancel shares or treasury stock? Thank you very much. So that was about the consolidated OP and standalone OP that are a little bit different and there's a gap. Can you elaborate a little bit? Hello, I am Kim Kyung-Jin. So the spin-off date is March 1st. So the accounting method of the operating income and the non-operating income was a little bit different, and that explains the gap. So regarding the cancellation of Treasury stock, so when we transitioned to a holding company, when we communicated with our shareholders, we said that Some time this year, before the end of this year, we're going to cancel parts of our treasury shares, and we are considering this option. And I think that further discussions will be needed at the board. And as promised to our shareholders, we will try our best to confirm this decision by the end of this year. Thank you. So there are no further questions asked. So if you have any questions or further questions, please press the asterisk followed by number one on your phone. Yes, I believe that there are no further questions. So with that, I would like to wrap up the POSCO Holdings first quarter earnings call. Thank you very much to all our investors and analysts for joining us today. Thank you and goodbye.