SK On Strengthens Battery Raw Material Supply Chain in Australia

Ryujin-sook SK On Strategy Officer (third from the right) and Ron Mitchell Global Lithium Managing Director (fourth) are signing a memorandum of understanding in the afternoon of the 28th in Perth, Australia. Photo by Global Lithium

SK On is strengthening the supply chain of key electric vehicle battery materials in response to the United States' Inflation Reduction Act (IRA).

On the 29th, SK On announced that it had signed a memorandum of understanding (MOU) with Global Lithium in Perth, Australia, the day before to ensure the stable supply of lithium.

SK On will receive a long-term stable supply of lithium concentrate (spodumene, ore with impurities removed) produced from mines owned and developed by Global Lithium. In addition, SK On will have the opportunity to purchase shares in production projects promoted by Global Lithium.

Furthermore, SK On plans to explore additional business opportunities within the battery value chain, such as mineral mining and lithium intermediate product production, together with Global Lithium.

Founded in 2018, Global Lithium is listed on the Australian Securities Exchange and is currently conducting large-scale lithium concentrate development projects at two mines in Australia. The estimated lithium reserves of these mines total 500,000 tons.

Lithium, also known as "white oil," is an essential raw material for battery cathode materials. Lithium ions move between the cathode and anode in batteries to generate electricity. However, due to the difficulty of mining and refining, supply has not kept pace with demand, causing prices to soar. In September last year, the price was around $20,000 per ton, but by September this year, just one year later, it exceeded $67,000.

Australia is the world's largest lithium producer and a major producer of other key battery minerals such as nickel and cobalt. It is also a country that has signed a free trade agreement (FTA) with the United States, which recently enacted the Inflation Reduction Act, making it a promising country for additional business opportunities related to battery raw materials.

To support production expansion and cope with geopolitical instability, SK On has been steadily strengthening the supply chain of key battery raw materials. In addition to cooperation with Global Lithium, efforts to secure raw materials continue in various countries such as Australia, Canada, Brazil, and Argentina.

In June, SK On signed an MOU with POSCO Holdings to jointly discover and cooperate on projects across the entire value chain, from battery raw materials to cathode and anode materials and recycling. In 2019, SK On signed a contract with Swiss Glencore, the world's largest cobalt producer, to purchase 30,000 tons of cobalt over six years from 2020 to 2025.

SK On is rapidly increasing its market share in the global battery industry. Its market share ranking, which was 9th in 2019, has risen vertically to 5th place. As the business expands, production bases have extended to the United States, Hungary, China, and others, with a total of seven plants currently operating and seven more either under construction or planned.

Ryu Jin-sook, SK On's Head of Strategy, said, "This agreement will be an opportunity to strengthen SK On's global production capacity and sustainable growth," adding, "Both companies will seek additional business opportunities to accelerate supply chain expansion." Ron Mitchell, Managing Director of Global Lithium, said, "As the electric vehicle market grows rapidly, the demand for lithium for batteries will increase even more," and "It is very meaningful that Global Lithium has signed a business agreement with SK On, a global battery manufacturer."