Up to 6,000 Tons to Be Supplied This Year
Enough for About 100,000 Electric Vehicles
Proactive Response to the Revised U.S. IRA
SK On is set to further secure lithium hydroxide, a key raw material for electric vehicle batteries, from domestic sources. This move will strengthen its purchasing competitiveness through supply chain diversification and allow the company to proactively respond to the revised U.S. Inflation Reduction Act (IRA).
SK On announced on the 17th that it has signed a supply contract for lithium hydroxide with Ecopro Innovation. SK On
On the 17th, SK On announced that it has signed a lithium hydroxide supply contract with Ecopro Innovation. The signing ceremony, held the previous day at the SK On Green Campus in Jongno-gu, Seoul, was attended by Park Jongjin, Head of Strategic Procurement at SK On, Kim Yuntae, CEO of Ecopro Innovation, and other representatives from both companies.
Through this contract, SK On will receive up to 6,000 tons of domestically produced lithium hydroxide from Ecopro Innovation by the end of this year. This volume is enough for approximately 100,000 electric vehicles and will be supplied to SK On’s U.S. plant after passing through domestic cathode material factories. The two companies also plan to sign an additional contract within this year for further supply of lithium hydroxide over the next two to three years.
Lithium hydroxide, a core raw material for nickel-cobalt-manganese (NCM) cathode materials, is mainly supplied from overseas, including China. According to the Korea International Trade Association, Chinese imports accounted for 82.7% of lithium hydroxide imports last year.
SK On aims to enhance supply chain stability and strengthen price competitiveness by sourcing raw materials domestically.
Domestically produced lithium hydroxide meets the requirements for the IRA Advanced Manufacturing Production Credit (AMPC), playing a key role in securing cost competitiveness for U.S.-made batteries.
In the U.S., on July 3 (local time), the “One Big Beautiful Bill (OBBBA),” which includes the IRA revision, passed Congress. Under the newly established “Prohibited Foreign Entity (PFE)” regulation, companies must meet the “Material Acquisition Cost Ratio (MACR)” requirement from 2026 to receive the AMPC.
MACR refers to the proportion of direct material costs?such as cathode and anode materials?used in battery production that are non-PFE direct material costs. The MACR requirement starts at 60% in 2026 and increases by 5 percentage points each year (10 percentage points in 2028), reaching 85% from 2030 onward.
To respond to the IRA, which was introduced in 2022, SK On has been diversifying its global raw material supply chain. In June last year, SK On signed a memorandum of understanding for lithium supply cooperation with ExxonMobil in the U.S., a natural graphite supply contract with Westwater in February of the same year, and a lithium supply contract with Chile’s SQM in November 2022.
Using domestically produced raw materials also leads to cost savings in customs and transportation. Previously, in November last year, SK On signed a domestic lithium hydroxide supply contract with Posco Pilbara Lithium Solution.
Meanwhile, Ecopro Innovation began mass production of lithium hydroxide in 2021. By the end of this year, its combined production capacity in Korea and Europe will reach 34,000 tons. The company plans to expand its capacity to a maximum of 79,000 tons by 2028, focusing on Korea and the U.S.
Park Jongjin, Head of Strategic Procurement at SK On, stated, “We are building a stable supply chain in response to global policy changes and the rapidly changing market environment,” adding, “We will further strengthen our North American business capabilities by securing highly competitive raw materials and diversifying our strategic supply partnerships.”
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