Battery-maker SK On secures Aussie lithium

SECURING raw material supplies in the face of geopolitical risks and rapid business growth may have become an obsession for the fifth-largest global EV battery producer, South Korea’s SK On.

After a recent series of similar supply agreements, SK On has signed another lithium hydroxide deal to help guarantee its battery production over the next five years.

The latest signing, with Chilean lithium miner SQM, follows last month’s contract with Australian lithium miner Lake Resources as SK On steadily builds its supply chain for key battery materials.

The contract with Lake Resources guarantees battery grade lithium for a maximum 10 years commencing at the end of 2024 and involves SK On acquiring a 10 per cent stake in the Australian miner.

SK On will be supplied with 13,600 tonnes of lithium from Lake Resources for the first two years and 22,700 tonnes of lithium from the third year, meaning the Korean battery-maker can secure a total of 208,700 tonnes of lithium – enough to produce batteries for approximately 4.9 million electric vehicles. 

The battery manufacturer quickly followed up its Australian activities by signing with SQM to supply more of the mineral for the next five years, commencing in 2023.

It is a move that SK On says will further strengthen the supply chain for critical battery materials – particularly in relation to complying with the US Inflation Reduction Act (IRA) – as well as maintaining business growth and mitigating global risks.

The SQM agreement was ratified at a signing ceremony at SK Group’s headquarters in Seoul, South Korea attended by SK On chief operating officer, Jin Kyo-won and SQM executive vice president for lithium, Carlos Díaz.

SK On will purchase up to 51,700 tonnes of high-quality lithium hydroxide from SQM for five years starting in 2023. This is enough to produce batteries for approximately 1.2 million electric vehicles.

Also on the table between SK On and SQM are the potential for additional lithium supply, potential investment in production plants and waste battery recycling.

The deal with SQM is expected to boost SK On’s efforts to meet IRA requirements as Chile is a free trade agreement (FTA) partner with the United States, which would unlock a tax credit to consumers who buy an EV with batteries that use a certain percentage of critical minerals extracted or processed in the US or in the countries that have an FTA with the US.