SK On has signed a contract with the Korean battery material manufacturer Ecopro for the supply of lithium hydroxide. The primary product processed within South Korea is to be supplied to SK On’s US plants – where it will help to ensure that vehicles with SK On batteries remain eligible for subsidies.
According to Korean media reports, the newly signed contract means that SK On will receive up to 6,000 tonnes of lithium hydroxide produced in South Korea from Ecopro over the course of this year, enough for the batteries of around 100,000 electric vehicles, according to reports. And: The supply contract for domestically produced lithium hydroxide is a response to the US Inflation Reduction Act. According to the current eligibility criteria, only vehicles and components from certain production countries qualify for the full tax credit in the USA. However, the Trump administration has now decided to phase out the credit completely at the end of September. However, it is quite possible that the US tariffs are also being factored into SK On’s strategic considerations.
Either way, the agreement will definitely help SK to diversify its lithium hydroxide supply chain, which was previously heavily dependent on China. The up to 6,000 tonnes for the current year will be transferred from Ecopro to SK’s Korean cathode plants, processed there and then transported to the company’s battery factories in the United States. The two companies are also said to be planning to sign another multi-year supply agreement later this year, covering the next two to three years.
According to the Korea Herald, the deal with SK On will lead to Ecopro’s first delivery of lithium hydroxide to a global battery manufacturer. The newspaper refers to statements by Kim Yoon-tae, CEO of Ecopro Innovation. The supplier started mass production of lithium hydroxide in 2021 and is expected to reach a combined production capacity of 34,000 tonnes in Korea and Europe (specifically in Hungary) by the end of this year. According to the media portal Pulse, global capacity is to be expanded to 79,000 tonnes by 2028, with the focus likely to be on South Korea and the USA.
pulse.mk.co.kr, biz.chosun.com, koreaherald.com
