SK On Secures Three Years of Lithium Supply...Strategic Alliance with POSCO Group

Introducing Lithium from the Hombre Muerto Salt Lake
Stabilizing the Key Cathode Material That Drives 40% of Battery Costs

SK On is strengthening its raw material supply chain strategy. By signing a long-term lithium purchase agreement with POSCO Group, the company is working to enhance mid- to long-term stability in raw material procurement and to advance its sourcing structure.

Scene from the signing ceremony for a lithium purchase agreement between SK On and POSCO Group at SK On Green Campus in Jongno-gu, Seoul on the 24th. Provided by SK On

SK On announced on the 25th that it had signed a long-term lithium purchase agreement with POSCO Group on the 24th at SK On Green Campus in Jongno-gu, Seoul. The signing ceremony was attended by Park Jongjin, Head of Strategic Procurement at SK On, and Lee Jaeyoung, Head of Energy Materials Business Management at POSCO Holdings, among others.

Under this agreement, SK On will receive up to 25,000 tons of lithium from POSCO Argentina, POSCO Group's lithium production subsidiary in Argentina, between 2026 and 2028. This volume is sufficient to produce batteries that can be installed in approximately 400,000 electric vehicles.

The lithium will be produced from the Hombre Muerto salt lake in Salta Province, Argentina. SK On plans to use it for its electric vehicle battery projects in Europe and North America. The company is also reviewing ways to apply it to the rapidly growing Energy Storage System (ESS) business.

Lithium is an essential raw material for cathode materials, one of the four key components of lithium-ion batteries. According to industry sources, cathode materials account for about 40% of total battery production costs, and lithium is estimated to represent around 30% of cathode material costs. This is why securing lithium is directly linked to battery price competitiveness.

Through this agreement, SK On plans to respond more flexibly to supply and demand volatility in the global raw material market. Since the global lithium processing market is heavily concentrated in certain countries, supply chain stability is regarded as a key factor that determines mid- to long-term competitiveness. Based on its cooperation with POSCO Group, SK On intends to strengthen its capabilities to manage geopolitical risks and enhance its competitiveness in raw material procurement.

On the same day, the two companies also discussed a joint strategy for responding to the ESS market, including ways to apply POSCO Group's Argentina-produced lithium to SK On's ESS products. In addition, they reviewed potential cooperation on recycling spent batteries through POSCO HY Clean Metal, POSCO Group's secondary battery recycling subsidiary.

Park Jongjin, Head of Strategic Procurement at SK On, said, "This agreement is part of our supply chain diversification strategy to strengthen mid- to long-term stability in raw material procurement and our sourcing competitiveness," adding, "We will expand our raw material competitiveness beyond electric vehicles to include ESS as well."

Lee Jaeyoung, Head of Energy Materials Business Management at POSCO Holdings, said, "Through this agreement, we have secured a future growth engine for POSCO Group's core business in secondary battery materials," and added, "We will strengthen our business collaboration with SK On across the entire secondary battery value chain and jointly pioneer the global market."