No value was put on the agreement but the Chinese company will also have the right to purchase 3,000 tonnes of rare earth products from the project within three years of production.
The company's decision to stockpile Neodymium Praseodymium (NdPr), used in industrial magnets, was to help it consolidate its position as a preferred supplier to customers outside China.
POSCO's decision is the latest in a string of setbacks for Chile, which has struggled to modernize its lithium policies, boost output and develop a domestic battery industry.
The final approval from the NSW state government follows a surprise victory for the pro-coal conservative government in an Australian election in which climate change had been a key issue.
Japan is Asia's biggest importer of aluminium and the premiums for primary metal shipments it agrees to pay each quarter over the LME cash price set the benchmark for the region.