SK on secures Korean lithium hydroxide for US battery push

SK on secures Korean lithium hydroxide for US battery push

SK on Co., the electric vehicle (EV) battery subsidiary of South Korea’s SK Group, has signed a new supply agreement for domestically produced lithium hydroxide, a key raw material in EV batteries, as part of an effort to actively strengthen its response to the U.S. Inflation Reduction Act (IRA).

The company announced Thursday that it signed an agreement with EcoPro Innovation Co. on July 16 at its Green Campus in Jongno, central Seoul.

Under the deal, EcoPro Innovation will supply up to 6,000 tons of Korean-made lithium hydroxide to SK on by the end of this year.

The volume is sufficient for batteries to power roughly 100,000 EVs. The material will be processed at SK on’s domestic cathode plants and shipped to its battery manufacturing facilities in the United States.

The two companies also plan to sign an additional multi-year supply agreement, covering the next two to three years, within this year.

The deal is expected to help SK on diversify its lithium hydroxide supply chain, which has relied heavily on China.

According to the Korea International Trade Association, 82.7 percent of Korea’s lithium hydroxide imports came from China last year.

Korean-made lithium hydroxide qualifies for the Advanced Manufacturing Production Credit (AMPC) under the IRA, which gives it a competitive edge in cost structure for U.S.-bound battery production. It also reduces costs associated with customs and transportation.

EcoPro Innovation began mass production of lithium hydroxide in 2021. By the end of this year, the company’s combined production capacity in Korea and Europe is expected to reach 34,000 tons.

It plans to expand global capacity to 79,000 tons by 2028, focusing on Korea and the U.S.

Kim Yoon-tae, chief executive officer of EcoPro Innovation, said:

The agreement marks our first lithium hydroxide supply deal with a major global battery maker,

“We will accelerate efforts to secure customers in North America and Europe.”

SK on noted that it is actively building a stable raw materials supply chain in response to global policy shifts and a rapidly evolving market environment, and will continue to strengthen its North American operations through strategic partnerships and competitive sourcing.

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SK on secures Korean lithium hydroxide for US battery push, source