POSCO : Transition to a Holding Company and Business Strategies for 2030

2022 Extraordinary General Meeting of Shareholders

Transition to a Holding Company

& Business Strategies for 2030

January 5, 2022

1 Proposed Structure to Enhance Growth and Valuations

The proposal to spinoff the steel business and transform the company into a Holding Company serves two main purposes.

First, We accelerate a more balanced growth in group portfolio in order to respond towards revolutionary change in business environment.

The speed and regularity with which innovation in green, digital and bio-technology has been emerging coupled with the rapid growth in eco-friendly businesses such as electric vehicles and renewable energy, has intensified global competition and put a strain on supply chain security.

The vertical spin-off and transition to a Holding Company structure would better support the management decision-making process and fortify expertise of each business segment.

• Transform‌ steel business to a low-carboneco-friendly production process and focus on global growth
• Strategically‌ foster new growth business, such as secondary battery materials, hydrogen, etc.

Pursue

balanced

growth

Secondly, the proposed structure is to shift the market perception on POSCO from a steel- only based company to a 'green' materials company so that the Company's efforts as a growth stock can be properly reflected in its corporate value.

POSCO shares continued to be under-valued, underperforming the KOSPI, despite delivering record profits this year and the increased visibility of new business earnings growth. Growth from new business segments such as battery materials, lithium/nickel, and hydrogen, were exceptional through capacity expansion, commercial production and global partnerships establishments.

As such, we have decided to shift to a Holding Company in order to change the perception of a steel-based company while efficiently pursue new growth strategies and transition to eco- friendly production process.

	2007	2021
Steel Operating Profit	KRW 4.7 Tri.	KRW 8.0 ~ 8.5 Tri. (f)
Stock Price*(KRW/Share)	765thousand		275thousand
Market Cap*	KRW 67 Tri.		KRW 24 Tri.

* POSCO stock price and market capital data : Applied Oct 2, 2007 (2007 data), applied end of the year closing price for 2021

Green Tomorrow,

2 Proposed Structure and Corporate Governance Post Vertical Spin-Off

The Holding Company will strengthen its corporate governance structure by increasing management transparency based on Board of Directors, while ensuring unlisted steel subsidiary to foucs on its core competence.

Transition to Holding Company

After the spin-off, the Holding Company will wholly own the steel business as an unlisted subsidiary, to allow the Holding Company to focus on driving POSCO Group's vision for 2030.

Holding Company

(Surviving Company)

Vertical spin-off steel business	Newly established companies will remain unlisted

100%

63%

53%

100%

60%

100%

100%

100%

POSCO	P-Int'l	P-E&CP-EnergyP-Chemical Lithium	Nickel	Hydrogen
(Unlisted New Company)
		＊POSCO‌	Lithium Solution,
		POSCO-Argentina, etc.

Corporate Governance Structure for POSCO Group

Steel company is to remain unlisted to prevent any conflicts of interest within the Holding Company and its subsidiaries and ensure existing shareholders of the Holding Company enjoy the benefits of the steel business performance. The Articles of Incorporation for the new steel company will not include any articles required for listing and will mandate the added measure of requiring a special resolution from a shareholder meeting at the Holding Company level, in order to list.

New businesses in hydrogen and nickel, will be unlisted after proposed spin-off.Financing will primarily be executed on the Holding Company level, and in case of financing, equity financing from the Holding Company will take place, not through listing, in order to protect shareholders' value.

To further strengthen Board-centric management of the Holding Company, the expertise of the BOD will be made more diversified and the portion of outside directors will increase. As for the steel company, even though not listed, it will appoint outside directors and establish an ESG committee and Audit committee, to ensure management transparency and clear communication of key information.

3 The Holding Company and ESG Management

The Holding Company will build balanced growth of group portfolio by creating business synergies and developing future business, and lead group-level of ESG management.

The Holding Company's integral role

The Holding Company will steer the group's growth strategy and oversee the development of the Group's future business portfolio, by identifying business opportunities and acquisition/ investment targets. It will act as the portfolio developer for future businesses.

The Holding Company will also drive the Group's R&D strategy by exploring intra-Group and partnership synergy opportunities, thereby establishing a future new technology strategies.

Develop future business portfolio

• Establish‌ growth strategy in group level
• Find‌ new business opportunity
• Pursue‌ new business, through M&As

Restructure group business and		Set R&D Strategy in
create synergy		group level
- ‌Diagnose and evaluate group business		- ‌Establish strategies to acquire new
- ‌Nurture growth business and set the direction		technologies for the future
for restructuring		- ‌Recruit and nurture R&D talents
- ‌Discover opportunities for synergy within		- ‌Build group wide R&D cluster to develop
businesses		future technologies

ESG management strengthened by Holding Company structure

POSCO Group plans to continue strengthening its ESG management through the Holding Company Board of Directors after the transition. The BoD of the Holding Company will not only establish the Group's ESG policy, but also monitor ESG issues of the subsidiaries and actively identify solutions. We also commit to establishing and strengthening internal ESG organization and headcount at key subsidiaries so that each business can hone their varying material ESG capabilities as required by each business segment or industry.

• Strengthen 'ESG Committee' within Holding Company's BoD
• • Composition : Majority of the committee will be composed of independent directors
  • Role‌ : Establish Group-level ESG policy and management system, monitor Group's ESG issues, publish ESG report, communicate with investors, check ESG issues and regularly discuss strategies with the management of subsidiaries, etc.
• Establish 'ESG Committee' on steel company's BoD
• • Composition‌: Executive Director (CEO, Environment and Safety Officer) and Independent Director (ESG expert in steel business)
  • Role‌ : Establish low-carbon policy and roadmap for implementation, formulate safety and health plan, manage ESG-related performance indicators, etc.
• Establish 'Group ESG Council', led by CEO of Holding Company
• • Composition : CEO of Holding Company and CEO of major subsidiaries
  • Role‌ : Discuss and set ESG management system, identify risks and agree on approach/ solutions for carbon neutrality, safety, health, environment, human rights, etc. issues. Report findings to the Holding Company's board or ESG Committee (at least once a quarter)

Green Tomorrow,

4 Posco Group's Vision and Euterprise Value

We are determined to become a global business leader contributing to usher for a

sustainable future for humanity by accelerating balanced growth of our core businesses

under the Holding Company structure.

POSCO Group's vision

With the target of achieving a balanced business portfolio by 2030, and the vision to become a global business leader contributing to ushering in a sustainable future for humanity, we aim to grow our main businesses and identify new opportunities centered around our 5 key goals below.

Vision	[	The global businessleader for sustainable future ofhumanity	[

Complete carbon	Lead in new mobility	Lead in renewable	Form future	Secure global
neutrality in steel	application	energy	housing	food resources

Goals

Based on HyREX &
Renewable Energy	Car body	BatteryPack

Bipolar Plate

Motor

Cathode/

anode

LNG	Hydrogen,	Zero-E	Modular	Build global infrastructure for
	Renewable-E	Building	Construction	processing and distribution

Main

Secondary

Lithium/

Construction,

Business

Steel

battery

Hydrogen

Energy

Agri-Bio

Nickel

Infrastructure

materials

Target to triple Enterprise Value by 2030

We plan to triple the Enterprise Value of POSCO by 2030,

through building balanced group business portfolio.

3 x +α

(EV*, trillion KRW)

43

2021	2030	Steel	Cathode	Lithium	Hydrogen Energy E&C, Agri-
	/Anode	/Nickel	Bio etc.

* Enterprise Value : Sum of business value estimated with the business plan (EBITDA, Sales, etc.) multiplies by market multiple