SK On Strengthens Raw Material Competitiveness with Domestic Production of Lithium Hydroxide Supply

3-Year Supply Contract with POSCO Philbar Lithium Solution for up to 15,000 Tons

Lee Kyung-seop, CEO of POSCO Philbar Lithium Solution (left), and Park Jong-jin, Vice President of Strategic Procurement at SK On, are posing for a commemorative photo after signing a lithium supply contract on the 22nd at POSCO Center in Gangnam-gu, Seoul. Photo by SK On

SK On secures domestically produced lithium hydroxide. By diversifying the supply sources of lithium hydroxide, a key raw material for batteries, the company plans to strengthen its competitiveness in raw material procurement, including purchase costs.

On the 24th, SK On announced that it signed a long-term supply agreement (LTA·Long Term Agreement) for lithium hydroxide with POSCO Pilbara Lithium Solutions at the POSCO Center in Gangnam-gu, Seoul on the 22nd. The signing ceremony was attended by Park Jong-jin, Vice President of Strategic Purchasing at SK On, and Lee Kyung-seop, CEO of POSCO Pilbara Lithium Solutions, along with other representatives from both companies.

Through this contract, SK On will receive up to 15,000 tons of high-purity lithium hydroxide produced domestically from POSCO Pilbara Lithium Solutions over three years starting next year. There is also an option to extend for another three years. Lithium hydroxide is a major material for nickel-cobalt-manganese (NCM) cathode materials.

POSCO Pilbara Lithium Solutions is a joint venture established in 2021 by POSCO Holdings and Australian mining company Pilbara Minerals, with respective stakes of 82% and 18%, to produce lithium hydroxide. They extract lithium hydroxide at their plant in Gwangyang, Jeollanam-do, using lithium concentrate sourced from Pilbara Minerals in Australia.

Lithium concentrate is a high-purity mineral processed and concentrated from lithium ore. Pilbara Minerals produces 680,000 tons of lithium concentrate annually from the Pilgangoora mine in Western Australia. Since investing in Pilbara Minerals in 2018, POSCO Holdings has secured a 20-year supply of lithium concentrate.

By expanding lithium hydroxide supply sources, which have been concentrated in specific countries such as China, SK On expects to enhance its negotiation power for raw material purchases. The company aims to shorten lithium hydroxide procurement time to reduce logistics and inventory costs and respond more quickly to external factors such as demand.

Meanwhile, SK On is diversifying its global supply chain for key minerals. In June this year, it signed a memorandum of understanding with ExxonMobil in the U.S. for lithium supply cooperation; in February, it signed a natural graphite supply purchase contract with Westwater in the U.S.; and in November 2022, it signed a lithium supply purchase contract with SQM in Chile. In December 2019, it also signed a cobalt purchase contract with Glencore in Switzerland.

Vice President Park said, "SK On is strengthening cooperation with excellent raw material companies worldwide to quickly respond to changes in global market demand. We will further enhance our competitiveness in raw material procurement through diversification of supply sources."

Lee Kyung-seop, CEO of POSCO Pilbara Lithium Solutions, said, "This contract is significant as it recognizes the competitiveness of POSCO Group's lithium business from a global leading battery company. We will continue to strive for the development of the domestic secondary battery materials industry and securing national competitiveness in eco-friendly future materials."