SK On has announced a strategic move to enhance its raw material competitiveness by securing domestically produced lithium hydroxide, a critical component in battery manufacturing. By diversifying its supply sources, SK On aims to bolster its procurement efficiency and cost-effectiveness, while swiftly adapting to market changes and external conditions.

On November 22nd (KST), SK On formalized a long-term agreement (LTA) with POSCO Pilbara Lithium Solution at a signing ceremony held at the POSCO Center in Gangnam, Seoul. The event was attended by key representatives, including Park Jong-jin, Head of Strategic Procurement Office at SK On, and Lee Kyung-sub, CEO of POSCO Pilbara Lithium Solution.

Under this 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.

Lithium spodumene is a concentrated high-purity mineral derived from lithium ore. Pilbara Minerals produces approximately 680,000 tons of lithium spodumene annually from its Pilgangoora mine in Western Australia. Since investing in Pilbara Minerals in 2018, POSCO Holdings has secured a 20-year supply agreement for lithium spodumene.

With this expansion of its lithium hydroxide supply beyond China, SK On anticipates enhancing its negotiation leverage for raw material procurement. The company aims to reduce procurement lead times, lower logistics and inventory costs, and respond more rapidly to market demand fluctuations.

SK On is actively diversifying its global supply chain for key minerals. Recent initiatives include a memorandum of understanding with ExxonMobil in June for lithium supply cooperation, a natural graphite supply agreement with Westwater Resources in February, and a lithium supply contract with SQM in Chile in November 2022. In December 2019, SK On also secured a cobalt supply agreement with Glencore in Switzerland.

“We are committed to strengthening our collaboration with leading global raw material companies to quickly adapt to changing market demands,” said Park Jong-jin, Head of SK On’s Strategic Procurement Office. “By diversifying our supply sources, we aim to further enhance our procurement competitiveness.”

Lee Kyung-sub, CEO of POSCO Pilbara Lithium Solution, commented, “This agreement is significant as it recognizes the competitiveness of POSCO Group’s lithium business by a leading global battery company. We will continue our efforts to advance South Korea’s secondary battery material industry and secure national competitiveness in eco-friendly future materials.”