From 2027 to 2031
"Strengthening IRA Response Capability"
SK On will receive natural graphite supply from its U.S. anode material partner Westwater Resources (hereinafter Westwater). The plan is to reduce dependence on China for graphite, a key anode material, and enhance responsiveness to the Inflation Reduction Act (IRA).
SK On announced on the 12th that it signed a natural graphite supply contract with Westwater. Westwater will supply natural graphite produced at its refining plant in Cullman, Alabama, to SK On’s U.S. factory from 2027 to 2031.
This is a 'conditional off-take' contract where SK On will purchase the material at a pre-agreed price if the developed material meets certain conditions. SK On can purchase up to 34,000 tons within the contract period in line with the growth pace of the North American electrification market.
The two companies expanded their partnership following a joint battery anode material development agreement signed in May last year. They plan to apply anode materials made from graphite refined by Westwater to batteries under development by SK On and jointly improve their performance.
Exterior view of SK Battery America, SK On's U.S. subsidiary located in Georgia, USA [Photo by SK On]
SK On stated, "By expanding cooperation to include the purchase of natural graphite, a raw material for anode materials, we expect to strengthen our ability to respond to the IRA." The IRA stipulates that from 2025, electric vehicle subsidies in the U.S. will not be available if critical minerals used in batteries are sourced from Foreign Entities of Concern (FEOC).
In the case of graphite, a key anode material, the global supply chain is almost entirely dependent on Chinese companies designated as FEOC. The battery industry is requesting at least a two-year exemption from FEOC application on graphite until the end of 2026 to secure new technologies and supply sources.
Anode materials are one of the four main components of lithium-ion batteries, along with cathode materials, separators, and electrolytes. They determine battery life and charging speed. Graphite accounts for about 95% of anode materials and is the core raw material. Anode materials are considered the most China-dependent material, with China accounting for about 85% of global anode material production.
SK On signed a memorandum of understanding with Syrah Resources in Australia in 2022 for natural graphite supply and also signed a joint anode material development agreement with Urbix in January last year. For cathode materials, SK On has strengthened its battery material procurement capabilities by consecutively signing contracts with Chile’s SQM and Australian companies Lake Resources and Global Lithium.
Westwater is a U.S. Nasdaq-listed company established in 1977 that initially operated in uranium-related businesses but transformed into a battery anode material developer after acquiring a graphite company in 2018. It holds exploration and mining rights for the 17,000-hectare Kusa graphite deposit in Alabama. Currently, it is constructing a graphite refining plant near the mine with an annual capacity of 7,500 tons, aiming for mass production in 2024.
Jongjin Park, Vice President of SK On, said, "We will continuously pursue collaboration with leading local raw material companies to actively respond to the IRA." Terence Cryan, Chairman of Westwater, said, "We are very pleased to cooperate with SK On, a global leader in the electric vehicle battery market, and support SK On’s supply chain strengthening."
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