POSCO Holdings Inc.

Hello, I head up the Finance and R&R Division at Posco Holdings. My name is Kim Sung-Joon. First, I'd like to thank everyone participating in the 2026 first quarter earnings call. Thank you to the investors and analysts. In the first quarter, the U.S.-Iran war disrupted the energy supply chain, which triggered greater fluctuations in the financial market that led to unstable exchange rates. So we witnessed aggravated challenges. Despite these headwinds, POSCO Holdings recorded consolidated revenue of $17.9 trillion and $710 billion in operating profits. Improvements are observed in both revenue and profit against the previous quarter. Looking at each business sector in rechargeable battery materials, lithium prices rose, helping lithium production subsidiaries to perform significantly reducing losses. Particularly in Pasco, Argentina, plant operation is ramped up while elevated lithium price continues to hold. As a result, in March it recorded the first-ever monthly profit. We believe this strong performance will continue in the second quarter. And in the second quarter, we also anticipate Pasco, Argentina's first-ever quarterly profit. In steel, despite volume growth in sales, rise in FX causes us to pay more for raw materials, squeezing profit. Nevertheless, improved performance in overseas subsidiaries helped register an overall rise in profit. Once geopolitical risk in the Middle East subsides and input costs pushed up by FX and oil price hike come down, taking into consideration time delay for cost-impact accounting, we anticipate gradual profit gains starting in the second half. In the infrastructure business, POSCO International saw its steel exports climb as well as demand recover in gas and energy sectors. Additionally, POSCO E&C has recovered its losses resulting from last year's accidents, transitioning to black ink through sizable profit gains. What is notable this year is the strategic shift in our steel business that is coming to fruition. We finalized divestment of PDSS, the underperforming China subsidiary, and to reduce the load of high-cost aging facilities, 2FINEX has been retired. Beginning in June, with the goal to expand our low-carbon production system, the world's largest new 2.5 million cent capacity electrical furnace will go into operation. To validate POSCO's proprietary Hyrex technology, a 300,000 ton capacity demo plant has broken ground. We've also acquired government permits for the Pohang Hyrex plant site. These developments help us to set up the groundworks to build our sustainable business structure. The integrated steelworks project in Odisha, India, is progressing. In October 24, we signed an MOU with JSW and an HOA in July 25. Most recently, a JV agreement has been signed. More detail regarding the recent agreement will be delivered in a few minutes by the head of our strategic investment division. Finally, allow me to speak about the third interim shareholder return policy to go into effect this year. In our effort to offer a proactive shareholder return policy, we've been paying quarterly dividends since 2016. The first installment of our interim shareholder return policy was announced in 2020. This year, we deliver its third installment. To enhance the ability of our shareholders to have better visibility into dividends, we wish to shift an earnings-based and performance-linked return policy. Based on net income attributable to controlling interests, we aim to deliver 35% to 40% shareholder return ratio. We will deliver a blended mix of cash dividends and share buyback and cancellations to shareholders boost shareholder value. Looking forward, we'll continue to drive strategic investment for future growth and harmonize that with earnings and performance-linked shareholder returns. This is how POSCO Holdings will build a virtuous cycle that generates robust business growth that will feed into boosting shareholder value. Now, I would like to invite the head of our Strategy and Investment Division to discuss the JVA signing with JSW in India. Then, Ms. Hanyang Ah, our IR Office Head, will offer more detail regarding our first quarter and 2026 earnings. Hello, everyone. I'm with the Strategic Investment Division at POSCO. My name is Kim Kwang-moo. On April 20th, JSW and POSCO signed an agreement for joint venture on an integrated steel mill. Let me deliver some more detail. Looking at governance first, this is, first of all, a 50-50 joint venture. Each company will represent three directors on the board and the CEO will have a five-year term and each will alternate to appoint the CEO. Costco's technology capability as well as JSW's operational capability and the cost competitiveness is what we are going on on this joint venture project. From a marketing perspective, J.S.W. has a strong sales network, and Posco Maristra has a strong automotive steel sheets capacity. So we want to be able to mitigate some of the entry barriers and to be able to generate stable profits in a high-growth market. For operational... Capability, this is not a market we enter alone. This is a joint venture. It is with the number one seal maker in India, JSW, and we'll be able to take advantage of their business capability. So local entry often triggers foreign risk, and we're able to eliminate that here. Product capability, of course, POSCO has a lot of product prowess, and so we'll be taking advantage of that as well. And low-cost iron ore material use is one of our advantages. Construction-wise, we will be completing this project by 2031. Looking at the plant site and the infrastructure surrounding the site, first of all, the site is in the state of Odisha, which is an area that promises convenient supply of raw materials. Rail, shipping... power and water use offers some advantages as well. So there's some geographical advantages that we can accrue. The biggest advantage is because we've tried to do this before and had difficulties in procuring site as well as permits and licenses, this time around because we've already acquired the site, a lot of the risk involved in this business has already been eliminated. Business overview, this will be blast furnace-based at 6 million ton capacity for high premium steel products. High profit automotive steel products need customer certification. So first of all, we will be responding to construction steel demand in the beginning stages to be able to generate some profit before we move into automotive steel sheets. Initially, we will be taking some of the materials from Korea, exporting it to India to be processed there for final product. But this project is different because we want to be able to localize all sourcing. Previously, and facility-wise, this will be an integrated mill that is not too different from what we have here in Korea. But we've added a pellet plant. That is the big difference. Investment overview? 30% of our own assets and 70% liability is what the funding is composed of, and so this is to ensure that we have the highest profitability. From a competitiveness perspective, CapEx competitiveness, first of all, we'll be able to cut costs on construction with cheap labor in India, and so there will be a lot more competitiveness that we can add to this investment project. And as mentioned earlier, we'll be able to use inexpensive iron ore available in India, and of course, low-cost labor as well. And our high-tech capability will promise the production of premium steel products that will promise profitability. So cost-wise, profit-wise, from both perspectives, we can accrue on this project. This is not a one-time investment project. I think we all know that India is a high-growth market, so we will be taking advantage of all growth opportunities in the market going forward. Thank you. Questions regarding this project? Please hold on to them until a little bit later. And next, we will talk about...

Now, in Q1, consolidated revenue came in at $7.9 trillion, up by around $1 trillion QOQ. OP was $707 billion, improvement from the previous year. EBITDA of $1.8 trillion, up $721 billion QOQ. Now, if you look at the SEAL business, profit increased by $91 billion. At POSCO, higher ethics rates, logistics costs, and raw material prices have left the margins under pressure. That said, supported by the base effect from the Zhangjiagang operation, which had posted large loss in Q4 of last year, and due to restricting a little bit sale, as well as earnings recovery in India and Vietnam, the overall profit, including overseas fuel, increased slightly. In the rechargeable battery materials, losses narrowed significantly, recovering about $150 billion in QOQ, and improvement was driven by higher operating rate at Argentina lithium plant, And at POSCO Pilbara Lithium Solution, the rebound in lithium prices and reversal of inventory valuation losses were also accounted for. Now, the profits and the infrastructure also increased by around $415 billion, one QOQ. POSCO International delivered solid profit growth, supported by favorable market conditions. And POSCO E&C, which recorded large loss in previous quarter, also turned to profit, posting $53 billion, one NOP. So, in summary, Profit levels, which had been weighed down in the previous quarter by one of the factors, normalized overall. In particular, what is meaningful structurally is that from the recent rise in lithium prices and the start of full-scale commercial production at the Argentina operation, all of these factors combined have led this upside. Now moving on to page six. Let me talk about advancing the structural transformation of steel business. POSCO is shifting business structure by reducing high-cost aging facilities, expanding its EAS-based low-carbon production system. First of all, POSCO is moving forward with the closure of number two of Finex at Pohang, which is about 1.5 million tons. So this is actually very crucial which has been very much a plus for our operations, but it's a very old facility and it is better for us to close it for its low operational efficiency. And we are currently planning to build a demo plant, preparing to transition to a Hirex. And there was also approval from MOLIT for the changes to the Pohang Industrial Complex Plan. So POSCO is now able to utilize 1.35 million square meters of public water in Pohang Steelworks to create the site that can be used for a high-rise transition. And then there is Gwangyang EAF, which broke ground in February 2024. The guild will begin operation in June with an annual capacity of 2.5 million tons and will be a key facility in POSCO's transition. Now, let me delve deeper into our lithium subsidiaries. First of all, POSCO Argentina, It's currently entering the commercial production phase of its phase one plant. As of March, the operating rate had risen to around 70%. Now the utilization rate has gone up. And as for the January and February, there have been a depletion of the low-price contracts. So with the signing, there was about a $50 billion one of losses per quarter, but we were able to narrow that gap widely at this time, and we'll be able to turn to profits in the near future. And in the third quarter and the fourth quarter, we expect to see earnings improved as well. And in the first quarter, there was a signing of long-term supply agreement with SK On, about 25,000 tons of so the customer base is also expanding steadily and will be able to secure more volumes. Now, with the increase in utilization rates, the costs are going down. But other than that, there is also a mid- to long-term effort being made in order to reduce production costs. To give you an example, in April this year, When it comes to the downstream strategy or downstream contract, it was changed into a fixed format, fixed form. And there is also additional PV efforts being made for the upstream contracts as well. So when it comes to the phase two construction, it is progressing towards completion in October this year. And we are also securing additional brine resources And there's also commissioning that is underway. So we'll be able to bring in more profits for this plant. And as for this plant, it will create in a conventional way and also produce technical grade lithium. So compared to phase one, it will be much easier for production. We completed the Argentinian brine plant resources with the LIS 100%, and we believe that we'll be able to secure more additional brine resources in the future. Now, let me talk about post-COHIBAR LUTEM solution. There was about 50 billion losses, but it was actually reduced to 3 billion at this time. So, mostly it was driven by increased sales and production. but it was also partially driven by the reversal of the inventory losses. And the biggest factor also was the higher lithium prices as well as the spodumene prices. So spodumene prices has gone up to 11% compared to lithium prices in terms of its percentage. And as for this Koh-i-Bara lithium pollution, if the raw material costs go up, the spreads will squeeze and it could pose as a burden for the company in the short term So going forward, it will be very much impacted by the spread that I talked about rather than lithium prices. So there are some uncertainties over there. As for Australia's mineral resources, once we complete the definitive agreement, there are merger control procedures that need to be done. So because of this merger control review, so we don't know when the exact timing of the joint venture establishment will be, But both companies are working towards establishing a joint venture around the fourth quarter of this year. And since the time of investment, sporting mean prices have risen sharply, so we expect this to significantly boost the new JV's ability to generate cash flow. And Postco, a tri-clean metal, recorded its first ever quarterly profit since its commissioning. So as a non-Chinese recycling company, we can say that it has entered a phase of stable operations. Now moving on to page eight. From 2023 to 2025, we have implemented our second interim shareholder return policy. Over the past three years, we paid out $2.3 trillion in cash dividends and $1.2 trillion in canceled treasury shares, all in on $3.5 trillion of shareholder return. Despite challenging business environment, we did our best to fulfill our promise to our shareholders. With regards to Treasury stock cancellation, the policy that was announced in 2024, so it accumulated to $1.2 trillion, and we completed about $635.1 billion of cancellation that we made. So all in all, the future, the Treasury share cancellation plan was about $1.8 trillion for the past three years, and we have completely succeeded it. Now let me talk about the next three years. When it comes to our existing shareholder return policy, it was to make sure that the surplus cash flow can be used to pay out dividends as well. But as the strategic investments are rising on the rise, the A dividend payout based on free cash flow in terms of growth could pose limitations. There were some voices about that. So we want to reinforce our high dividend market position and payout visibility. That is why we plan to shift toward a performance-linked shareholder return policy based on earnings. So we have set a target shareholder return ratio of 35% to 40% of adjusted net profit attributable to controlling interest rates. Now, when it comes to net profit, by using this adjusted net profit excluding non-recurring gains and losses as a baseline, we aim to, for example, the restructuring and so forth will be excluded. So by doing so, we aim to secure both the payout visibility and accessibility. So we want to address the uncertainties of the dividend payout ratio, payout policy based on free cash flow. So going forward, we will continue to maintain a balance between growth investments and shareholder returns, thereby enhancing our mid- to long-term corporate value. Now let me brief you on the earnings by company in more detail. First, POSCO. POSCO's Q1 OP declined QOQ to $213.1 billion. Sales volume recovered from the previous quarter. Production and utilization rate normalized. Selling prices also remained broadly stable QOQ. but due to higher raw material prices and because of their war in Iran, the FX rates and freight costs went up, so the cost burden for key raw materials increased. For example, when we source raw materials, because of the Iranian war, the logistics costs have gone up. So all of that is serving as a cost burden. So we will continue to make, despite our efforts, this cost push pressure on will remain as burden in the second quarter as well. Now, moving on to page 11, Overseas Deal. Indonesia, India, Vietnam operations are showing improving results, and the Changsha Gang operation has been divested. And let's go to page 12, Postcode Feature M. Postco FutureM recorded both higher revenue, operating profit. So when it comes to cathode material, it continues to secure new customers and expand sales. As for Anert, the impact of inventory adjustment is still going, but earnings improved due to base effect from the large loss recorded in the previous quarter. Moving on to page 13, Postco International. Postco International delivers solar results in both energy and trading businesses. In energy, profits increased on higher power plant utilization rates and S&P rise. In trading as well, profits improved thanks to higher sales of steel and materials, as well as favorable market conditions. And the capacity expansion effect from Cenex gas fields and the rise in the global commodity prices also had a positive impact for trading. Now, moving on to page 14, PESCO E&C posted a sharp improvement in OP turning to profit There were some one-off factors, but the projects are becoming normalized, and we want to also strengthen our cost control, so we expect to maintain such profitability level. Now, this concludes brief presentation on first quarter earnings of 2020 SIF. We'll move on to the Q&A session. Thank you very much.

We'd like to begin the Q&A. If you would like to ask a question, please press star 1 on your phone. If you'd like to cancel your question, please press star 2. The first question is from Hyundai Motor Securities. Please ask your question. Hello, my name is . Thank you for this opportunity to ask a question. I have about four questions. is regarding the JV agreements in India. So, you mentioned that this is part of your localization strategy. Once the JV goes into effect, in the past, you exported items to Patumarastra to be processed in India. What will happen to PMH after the JV agreement goes into effect? Second question is about the SEAL market outlook. hot roll products have been rising in price. What is the rationale behind that price hike? And how does this impact your business? From a distribution price perspective, hot roll price has increased, but relatively speaking, cold roll has stayed stagnant. So what do you project for cold roll products going forward? Third question. regarding the Iran situation and the Strait of Hormuz. And because this is likely to become a prolonged event, in terms of your exports as well as your FX and other business decisions, how does this situation impact your business? And the fourth question is regarding your lithium business. Lithium prices are rising. And I think it's very positive that performance has improved in the first quarter. But is this the result of rising lithium prices, or is it a result of something else? And for each factor, what is the proportion you would apply as the influencing factors? POSCO Future M has turned a profit. So what do you project to be its operating profit this year? That is all of my questions. My name is Noh Sung-nae, POSCO Marketing Strategy Office. My name is Kim Kwang-moo, Strategy Investment Division. I actually spoke to you about the JVA in India. In terms of the export volume, we need to consider the volume going to POSCO Maharashtra, and the other, the volume that goes from POSCO to India, per se. So I think we have to separate this into two parts. Up until the JV goes into effect, I think the hot roll products will continue to export in the same volume that we've seen in the past. So once the JV goes into effect, Because we will not be able to produce automotive steel sheets immediately, it will be something that we will gradually move on to. Initially, we'll be supplying non-automotive steel products, and I think our exports will not be impacted. Second question. I would like to address the second question. Again, my name is Noh Sung-nae. Marketing Strategy Office head. So demand has been lackluster, and because of the price drops as well as hikes in oil price and other input prices, this has triggered a lot of pressure. But because demand is increasing, hot roll product prices have been increasing as well. So this price is likely to hold for some time, even into the future. I believe because of the hot roll price, the cold roll product price will be impacted as well. And the anti-dumping cases that are being evaluated, this is going to impact future pricing as well. So there's still pressures on our costs, but given... the situation in the Middle East as well as our own domestic market situation, we will continue to look at our price in consideration of these situations. We've had many factors that push the price in the past, but because our input cost is also increasing, our margin is being squeezed. In the future, Southeast Asia and India will become new regions where we will have to identify different sources for selling. So hormones, straight closure, as well as oil price hikes, this is something that POSCO is most impacted by. So I'd like to ask someone from POSCO to answer this question. My name is Ha Jung Yeol, finance office head. Because of the Iran war, I think the business that is most highly impacted among POSCO group of companies is POSCO, first because of FX, the other because of oil price hikes, and next price hikes in LNG. FX impact is probably self-explanatory because we – spend more dollars than to buy dollars. That's where the impact is. And we do use a lot of oil. And so this causes a lot of pressure in our input costs. LNG price is the same. Our response for the FX situation is we want to be able to bring in more dollars. So our settlement currency is is being shifted, and we're seeing some impact there already. For LNG, we are diversifying our supply routes to other countries such as Indonesia, and so we're seeing impact here as well.

And third,

By increasing efficiency of energy use, we are identifying various ways to cut energy use costs. And so we are making efforts to offset some of these price hikes. But it's very difficult to offset all cost increases. Therefore, we will have to pass some of this on to the final price of our products. but we are an infrastructure business. We have our social responsibility to keep our prices rationalized, and so we will be very prudent in pushing up prices here. In relation to this issue, we've talked about oil, FX, and even LNG and energy prices. In terms of FX impact, of course, there's negative impact on POSCO, but We also have POSCO International, which is an exporting company. And at POSCO Future M, they are positively impacted by FX fluctuations. So I think the positive impact is able to cover about 50% of the losses experienced at POSCO. My name is Yi-Jae Young, Energy Materials Business Management Office. So we have had continuous deficits especially in brine lithium as well as in HY Clean Metal. However, we've seen profits registered this quarter. And so with these profit gains, we're able to offset some of the losses we've experienced in the past. Exactly what proportion has offset which parts of the losses, I can't tell you for sure. But what I can tell you is Because our leading customer, GM, had canceled all of its contracts, we were unable to deliver what we had produced. So now we are transitioning some of our supplies to energy industries, and so our plant is at 70% utilization rate, and so I think all of these positive factors are mixed, to say the least. Infrastructure business, Oh Young Dal. Costco ENC's profit size projection was the question, I believe. Operating profit is projected to be $120 billion. But there are some additional input cost risks. But some of the project value adjustments as well as other cost-cutting efforts will help us to push up our profit. And so our business plan is to achieve $120 billion. I believe we will achieve that.

Next question, please.

Next question is from HANA Securities, Park Sungbong. Please go ahead. Hello, I'm Park Sungbong from HANA Securities. I would like to ask two questions. First of all, regarding the direct employment of the subcontractors, we've heard about it on the news. So I believe there are about 7,000 of them. So if that is realized, the S&G, S&SG&A cost could go up. So I would like to know how much of a hike in the SG&A cost that we can expect. And the second question is, You mentioned about turning to profit in the second quarter, and probably in the latter half of the year, the utilization will go up. So I think that overall, we can look at profitability. When it comes to lithium prices or lithium business profits, what are your expectations for this year? Hello, I am head of finance at POSCO. Regarding the direct employment of the subcontractors, the employees, and cost increase. So, of course, partial increase in the cost or expenses will be inevitable because the benefits-related policy and measures need to be included. So when it comes to labor costs as well as employee benefits costs, that could result in increased expenses. But we're going to complement the relevant policies as well as improve work efficiencies. So we want to complement the increasing costs with other measures. Of course, we cannot confirm the actual impact for the time being. Now, when it comes to the brine as well as the iron or lithium businesses, we have to consider them separately. And as for the lithium brine, the Argentinian project, as our CFO mentioned, we believe that it is going to continue to see profits. But last year, there are some low-price contracts that will come to completion by the end of April. So that could have an impact on April, but from May, we will turn to profits. When it comes to the overall volume, it is subject to market conditions in the second half. When it comes to lithium concentrate, since it is a concentrate, it needs spodium as a raw material. So the average spodium price in March, and if you compare it to now, the selling price has increased about 5%, but the spodium price has risen 20%. So if you make the calculation, The raw material prices, we expected it to be 70%, but it has gone up to 85% overall. So it continues to remain very high, but we have to see whether it continues to remain very high. And according to our estimation, at this raw material price level, even China, without subsidy, they cannot turn to profit. So we believe believe that there is going to be a narrowing of the gap going forward. So in the second half, the brine lithium will be able to turn to profit, and the lithium concentrate, the 80% of the selling price is spodium, so we have to really closely watch the prices of the spodium. Now, let me add some comments about the recruitment or employment of the subcontractor employees. So when it comes to post-co, subcontractor employees, there are some costs that have incurred over the years. And once they are directly employed, so they will be translated into the labor cost as well as the employee benefit cost, so the direct employment will not have a huge impact. However, when it comes to the level of subcontractor If we are to include additional employee benefits, including the communications costs as well as the in-house meal costs and so forth, that could lead to a slight increase in the labor costs as well as the employee benefit costs. But after the direct employment, we will see more streamlined control and supervision structure. So that will lead to enhanced work efficiency and productivity. So overall, it will contribute to enhancing competitiveness of the company. And in the long term, it is not going to have a huge impact in terms of cost.

Next question. Next question is DB Securities.

Please ask your question.

I have two questions.

First, besides India, some of your overseas investments included Cleveland Cliffs, and the Wyala Steelworks in Australia. So do you have any budgets set aside or timelines set aside? And in terms of Hirex investment, you once estimated $40 trillion won. In which areas would you continue to invest this, and can you divide this up into the different areas of investment that IREX will need?

My name is Kim Gwang-moo, Strategy Investment Division.

Let me answer your first question. In 2025, in order to enter the U.S. market, we signed an MOU with Cleveland Cliffs. For cooperation and business synergy, we wanted to be able to cooperate. So there's been a lot of negotiation ongoing, especially about corporate valuation. But there are a lot of differences in opinions that is making it difficult for us to reach an agreement. So at this point in time, I'm afraid I don't have any more update, and we do not have a scheduled date for completion of this agreement. On the YLA Steelworks, It has gone into bankruptcy management, and this is under Australian government supervision. For POSCO, we are cooperating with Blue Scope, Japan's NSC, and India's JSW. We have submitted an NBIO to the government. By the second quarter of this year, they will be selecting priority candidates to take over this facility. Profitability schedule as well as investments will be determined at that point, and FS will continue until the third quarter. But at this point in time, the first step we have to pass is to be selected among those viable candidates. I will answer your second question. My name is Kim Sung-jun. You mentioned $40 trillion won This is inclusive of all costs relevant to IREX transition. So looking at the different items, there is the cost for the transition of facilities, and there's also the cost related to hydrogen So this includes all of the ancillary projects related to hydrogen development and production. And because the cost is increasing every time, I think I really couldn't give you specific numbers at this point. So this is all I can deliver at the moment.

Next question, please. Next question is QM Securities, Lee Jong Hyung.

Hello, I'm from QM Securities. I have a question about lithium. Now, in the slides, Costco Argentina earnings have, in terms of revenue, increased by $9 billion, but the OP by $37 billion. So how were you able to achieve such a dramatic earnings improvement, especially the profits improvement? Can you elaborate more on that? And the phase two will be completed by October. So phase two, when will that have impact on their earnings? Since when? From when? And if that is accounted for, when will the overall lithium business turn to profit? I would like to ask about the timing of turning to profit.

Hello, I am from Energy Materials Office.

Yes, the OPs have improved drastically compared to revenue. That is thanks to utilization rate hike. And what is also more important is that the lithium prices last year, when they were very, very low, we had contracts that were very competitive that were signed. And we completed a ramp-up and we will go for commercial production, but the certification is underway. So that is why we... have gotten the prices at the index level from our customers. So our selling prices are very much close to the index level as well. So that has translated into improved profitability. And when it comes to the phase two and that impacting our profitability, our depreciation costs will be reflected from October. So the depreciation level or the baseline For reference, for Latin America, it's about 25 years. But we consider that it will be about 10 years. So we believe that sales will be quite challenging for us because we don't have a lot of customers. So we want to consider the depreciations as a fixed cost. And as with the Phase II, we will have about $15 billion of losses. But phase one and two combined, we believe that we will definitely turn to profits this year.

Now, a similar question was made from JDB partners and Corate.

So I hope that this answer answers your questions as well. Next question, please.

Next question is from IM Securities, Kim Yoon-Sang. Please ask your question. My name is Kim Yoon-Sang. I have several questions. First, regarding lithium, let me add another question. are some plants that have closed and businesses that have gone out of business. So I think lithium supply is short. And so I'd like to know what your projections are about the lithium demand by the end of this year. And I think you are at the turnaround point as projected because lithium businesses continues to experience difficulties. There are some businesses that are hard hit, and Albemarle is projecting this as well. So when will the deficits turn to profit in the market? And third, CATL's sodium ion battery, how will this impact the lithium battery sector? and forest about India? Through the JV agreement, I think what you are looking to capitalize on is low cost and the availability of input materials. And given the demand and supply projections, do you have enough to allocate to the JV in India? Hello, Energy Materials Business Management Office. Lithium is in shortage, especially in the hard rock lithium because of the ESS demand. Brine lithium is very difficult to add volume, so we will have to replace this demand with or respond to this demand with hard rock. And because there are limitations to what we can take from China, we have to turn to Australia. And that's why spout-to-bin prices have really soared. And there are many announcements that we heard in February, which put the price at $20 to $26. UBS and J.P. Morgan have assessed this to be above $26. So what we believe is we can achieve our operating profit at prices even lower than that. Our projection is between $24 to $25. So $25 is, I think, the standard being used by the industry. So compare to about two months ago, prices have gone up by about $2 to $3. The second question. As I mentioned earlier, PILBAR lithium solution is very much dependent on the price of spudumene. So if we can add A and B and get to a positive territory, that would be great, but this is very difficult at the moment. So even with the spudumene prices at where they are, we want to be able to cut costs, and we are looking into other alternative mines as well, so there's a lot of effort we're making. The ATL's sodium ion batteries, how does it impact our lithium battery business? Currently, the impact is small, but how much can this pervade the market is the question that we're trying to answer. According to exports, some will be looking at about 3% penetration in the ESS market. Others put it at about 3% to 4%. So there is a lot of advantages here because of price, because of stability, because of charging speed. So I think this will continue to pervade or make inroads into the market. But how does it impact our lithium battery market? It will replace LFP, but it will not impact NCM market. We are also looking at the LH market, and so I think calibration with the LH market is a little bit difficult at the moment. My name is Ping Gang Mu, Strategy and Investment Division. Let me answer your question about the acquisition of iron ore. So iron ore price in India compared to the global iron ore price is quite different. The iron ore index price in the global market and the iron ore price used in India, if you compare the two, the Indian price is about 50% to 60% lower. And the government actually applies 30% interest to impair, to dissuade people from exporting this inexpensive iron ore outside India. So I think cost-wise, we have a definite advantage. And a stable supply of iron ore, looking at it from that perspective, most of the iron ore in India is in the eastern region of India. Odisha is on the east side of India, so we are closer to these mines. And JSW has 45% self-sufficiency, or so they claim, but because other steelmakers have lots of mines and they own them in the vicinity of our new plant, I don't think we will experience any difficulty in acquiring the needed iron ore. Our plan is to set up by 2031 and then to put it into operation by 2032. Our iron ore acquisition selections have already been made. Once you schedule ends, some of the mines have sold rights that expire in 2032. So come 2032, I think we will have more mines that we can acquire. So we're looking forward to doing that.

Next question, please. Next question is from Samsung Securities, .

Please go ahead. I have two brief questions.

First is about investment in India. Now it is seeing increased structural demand. So it is attractive, a market. But there is also domestic capacity expansion in India. and also the global players have entered the Indian market to increase production. So competition is going to become increasingly fierce in that market. So in that sense, we can consider ourselves as a latecomer in the market. So what kind of competitive edge do we have to be able to fare well in the market? And the second is about electrical arc finance, which will go operational from Q2. And when it comes to EAF, I would like to know about additional costs that could incur because of the operation of EAF. If that is the case, how much would that be?

I'm Kim Kang-moo, head of Strategic Investment Division.

You mentioned about the mismatch between supply and demand in the Indian market. So as of 2024, India's steel demand is about 150 million tons and supply is about 140 million tons, so 10 million tons of shortage of supply. So what will be the demand in the Indian market for steel? So by 2035 to 2040, India is going to see an increased economic growth, about 6% to 6.5%. And the steel demand is also going to see an increased 5% to 6%. So by 2035, we believe that about 250 million tons, 250 and 60 million tons of demand for steel will be there. But in terms of supply, the four major players, according to their disclosure, we're short of 20 million tons still. And even though the plan, if the plan actually goes ahead as planned, but if it doesn't, then we will have a more shortage. So when it comes to capacity expansion in India, it's a little bit different from China because the major four represent 80% of the market share. So they're influence is very big. In that case, the capacity expansion will not be a problem. So we believe that our competitive edge in the high-end or premium steel will be our key differentiator, differentiating point.

I am Hong Yun-sik, Steel Business Management Office Head.

You mentioned about the increasing cost due to EAF. Compared to the time of our investment decision, demand hasn't gone up very well much, but the EAF has been expanded, and we believe that the cost will go up than had expected. But even when we decided to invest, we didn't expect it to go fully operational. We were expecting about 10% to 20% of utilization, so we had a step-by-step plan for EAF in terms of going operational. So on an annual basis, if the utilization rate is about 10%, the cost will go up by about 70 to 80 billion KRW But, of course, if the costs go up, then the selling prices can go up, and there will be some premium that is formed. So I think that's going to have less of a negative impact. Now, is there any additional questions from the participants? There are no further questions. Thank you very much. We've received a lot of questions online as well for today's conference call. I think that they were pretty much covered during the conference call. And for additional questions, we'll get back to you through the AR team. Thank you for joining. Goodbye.