SK on said that the two sides would discuss future investments in additional lithium supply and production facilities and establish a cooperative relationship to recycle waste batteries. "This contract is part of a business strategy to support global production expansion and proactively respond to changes in the external environment," SK on's chief operating officer Jin Kyo-won said in a statement on November 6.
Lithium hydroxide is a key material for lithium-ion battery cathodes. Lithium hydroxide battery cathodes have more power density and a longer life cycle, but lithium hydroxide is in a much shorter supply than lithium carbonate.
South Korea has diversified its supply chain of battery materials to overcome the inflation reduction act (IRA) that only subsidizes electric vehicles using batteries, which are assembled in North America and contain more than a certain percentage of core minerals extracted in the region. Chile is a country that has signed a free trade agreement with the United States.
In September 2022, Korea Eximbank, an official export credit agency in South Korea, pledged a fund of $100 million for SQM, one of the world’s biggest lithium producers, to help ensure a stable supply of lithium for domestic battery and cathode material makers. The fund will be used to invest in SQM's development of lithium mines in Australia and the renovation and expansion of production facilities. SQM should supply lithium to South Korean companies for 10 years.
In October, SK on made a strategic equity investment to acquire a 10 percent stake 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. 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.
SK On and its American partner, Ford, have 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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