SK On Secures 57,000 Tons of Chilean Lithium in Response to IRA

Long-term Lithium Purchase Agreement with Chile SQM
Strengthening Supply Chain of Key Battery Raw Materials

Jin Gyowon, Chief Operating Officer of SK On (right), and Carlos Diaz, Head of Lithium at SQM, are signing a lithium purchase contract on the afternoon of the 4th at the SK Seorin Building in Jongno-gu, Seoul.

[Asia Economy Reporter Oh Hyung-gil] SK On has partnered with a Chilean lithium company following its collaborations with Australian lithium producers.

On the 4th, SK On announced on the 6th that it signed a long-term lithium purchase agreement with Chilean company SQM at the SK Seorin Building in Jongno-gu, Seoul. The signing ceremony was attended by Jin Kyowon, SK On Chief Operating Officer (COO), and Carlos Diaz, SQM Lithium General Manager, among others.

Under this agreement, SK On will receive a total of 57,000 tons of high-quality lithium hydroxide from SQM between 2023 and 2027. This amount is sufficient to produce batteries for approximately 1.2 million electric vehicles.

Both parties also agreed to discuss building a mid- to long-term partnership, including additional lithium supply, investment in production facilities, and recycling of used batteries.

Chile has a Free Trade Agreement (FTA) with the United States, and sourcing lithium from SQM is expected to be advantageous in meeting the requirements of the U.S. Inflation Reduction Act (IRA). The IRA mandates that a certain percentage of battery critical minerals used for electric vehicle tax credits must be mined and processed in the U.S. or countries with which the U.S. has an FTA.

Established in 1968, SQM is the only lithium hydroxide producer in Chile and is listed on the Santiago Stock Exchange in Chile and the New York Stock Exchange in the U.S. It has consistently produced high-quality lithium over the past decades and is expected to expand supply volumes in the future, significantly aiding SK On’s global supply chain strengthening.

SK On has steadily strengthened its supply chain for key battery raw materials. Last month, it invested 10% equity in Australian company Lake Resources and signed a contract to receive 230,000 tons of lithium over ten years starting from the fourth quarter of 2024.

Additionally, SK On has signed a memorandum of understanding (MOU) with Australian company Global Lithium for stable lithium supply, a cobalt purchase agreement with Swiss company Glencore, and an MOU with POSCO Holdings for comprehensive cooperation in the secondary battery business.

COO Jin Kyowon stated, "This is part of our business strategy to support global production expansion and proactively respond to external environmental changes. Our cooperation with SQM, whose excellent quality and reliability have been verified, has further strengthened SK On’s core mineral supply chain."

Carlos Diaz added, "We are pleased to strengthen our cooperation with SK On, which is rapidly increasing its market share in the global battery market. Beyond simply supplying lithium hydroxide, we will pursue various collaborations within the value chain to create synergy."

This content was produced with the assistance of AI translation services.