SEOUL -- SK on, a major battery maker affiliated with South Korea's SK Group, made a strategic equity investment in Lake Resources, a clean lithium developer based in Australia, to acquire a 10 percent stake and receive 230,000 tons of high-purity lithium for up to 10 years, starting in the fourth quarter of 2024. The deal underlines SK on's efforts to diversify a supply chain of raw materials for electric vehicle batteries.
SK on said it has signed a conditional framework agreement to acquire 10 percent of Lake Resources through the issue of new ordinary shares that will be completed in the first half of 2023. There is an option to extend a basic five-year contract for five more years.
With its contract with Lake Resources, Ryu Jin-suk, SK on's vice president in charge of strategy, said the South Korean company would be able to secure a stable supply of lithium for its U.S. supply chain. "Lake fits particularly well with SK On's ESG (environmental, social, and governance) policy as it utilizes environment-friendly direct lithium extraction technology."
Lake Resources owns mining rights in four lithium salt lakes and one lithium mine in Argentina. SK on will receive lithium from Argentina's Kachi salt lake. The Australian company introduced direct lithium extraction technology that uses less land than traditional saltwater evaporation methods to reduce the usage of water and re-inject filtered salt water into the stratum.
Lake Resources' CEO David Dickson said the contract will cement the ability of his company to scale up environmentally responsible production while SK on will have an opportunity to participate in other projects.
SK on and other battery manufacturers are actively investing in North America to cope with an inflation reduction act (IRA) that only subsidizes electric vehicles using more than a certain percentage of core minerals produced by the U.S. or countries that have signed free trade agreements with Washington.
In July 2022, SK On and its American partner, Ford, agreed to build a cathode plant in North America to secure a stable supply of core materials for electric vehicle batteries. Cathode materials to be produced by the plant will be shipped to a Ford-SK On battery joint venture called "BlueOval SK."
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