SK On has taken a strategic step to enhance its raw material competitiveness by securing domestically produced lithium hydroxide, a crucial component in battery manufacturing. This move aims to improve procurement efficiency, reduce costs, and enable the company to respond swiftly to market changes and external conditions.
On November 22, SK On signed a long-term agreement with POSCO Pilbara Lithium Solution at the POSCO Center in Gangnam, Seoul. The signing ceremony was attended by key representatives, including SK On’s Head of Strategic Procurement Office, Park Jong-jin, and POSCO Pilbara Lithium Solution’s CEO, Lee Kyung-sub.
Under the agreement, SK On will receive up to 15,000 tons of high-purity lithium hydroxide produced in South Korea over the next three years, with an option to extend the contract for an additional three years. Lithium hydroxide is an essential material for nickel-cobalt-manganese (NCM) cathodes used in batteries.
POSCO Pilbara Lithium Solution, established in 2021, is a joint venture between POSCO Holdings (82% stake) and Australian mining company Pilbara Minerals (18% stake). The venture processes lithium spodumene from Pilbara Minerals’ mines in Australia to produce lithium hydroxide at its facility in Gwangyang, South Korea.
Lithium spodumene is a concentrated, high-purity mineral derived from lithium ore. Pilbara Minerals produces approximately 680,000 tons 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.
By diversifying its lithium hydroxide supply beyond China, SK On expects to enhance its negotiating power in raw material procurement. The company aims to shorten lead times, reduce logistics and inventory costs, and adapt more rapidly to fluctuations in market demand.
SK On has been actively expanding its global supply chain for key minerals. Recent initiatives include a memorandum of understanding with ExxonMobil in June for lithium supply cooperation in the United States, 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 secured a cobalt supply agreement with Switzerland’s Glencore.
“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, added, “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.”
Source: SK Innovation
