SK On has recently announced a significant development in securing a long-term supply deal for domestically produced lithium hydroxide, a crucial component in battery manufacturing. The agreement was formalized with POSCO Pilbara Lithium Solution at a signing ceremony held at the POSCO Center in Gangnam, Seoul.
According to the terms of the agreement, SK On will receive up to 15,000 tons of high-purity lithium hydroxide produced in South Korea by POSCO Pilbara Lithium Solution over the next three years, with an option to extend for an additional three years. This lithium hydroxide is a vital material for nickel-cobalt-manganese (NCM) cathodes, essential for the production of batteries.
POSCO Pilbara Lithium Solution, a joint venture between POSCO Holdings and Australian mining company Pilbara Minerals, processes lithium spodumene from Pilbara Minerals’ Australian mines to extract lithium hydroxide at its facility in Gwangyang, South Korea. Lithium spodumene, a concentrated high-purity mineral derived from lithium ore, is produced in large quantities by Pilbara Minerals from its Pilgangoora mine in Western Australia. Since POSCO Holdings’ investment in Pilbara Minerals in 2018, a 20-year supply agreement for lithium spodumene has been secured.
By expanding its lithium hydroxide supply chain beyond China, SK On aims to enhance its negotiation leverage for raw material procurement. The company anticipates reducing procurement lead times, lowering logistics and inventory costs, and responding more rapidly to market demand fluctuations.
In addition to the recent agreement with POSCO Pilbara Lithium Solution, SK On has been actively diversifying its global supply chain for key minerals. This includes a memorandum of understanding with ExxonMobil for lithium supply cooperation, a natural graphite supply agreement with Westwater Resources, a lithium supply contract with SQM in Chile, and a cobalt supply agreement with Glencore in Switzerland.
Park Jong-jin, Head of SK On’s Strategic Procurement Office, emphasized the company’s commitment to collaborating with leading global raw material companies to meet evolving market demands. By diversifying its supply sources, SK On aims to further enhance its procurement competitiveness.
Lee Kyung-sub, CEO of POSCO Pilbara Lithium Solution, expressed the significance of the agreement in recognizing the competitiveness of POSCO Group’s lithium business by a leading global battery company. He reaffirmed the commitment to advancing South Korea’s secondary battery material industry and securing national competitiveness in eco-friendly future materials.
Overall, the partnership between SK On and POSCO Pilbara Lithium Solution signifies a strategic move towards sustainable and efficient battery manufacturing processes, contributing to the advancement of the electric vehicle industry and the transition towards clean energy solutions.
