SK On Secures Domestic Lithium Hydroxide Supply with Posco-Pilbara Agreement
SK On Co. has entered into a long-term agreement with Posco-Pilbara Lithium Solution to secure a domestic supply of lithium hydroxide, a crucial component for battery cathodes. The deal, signed in Seoul on Friday, represents a significant step towards strengthening SK On's supply chain for battery materials. Under the agreement, SK On will receive up to 15,000 tons of domestically produced lithium hydroxide over a three-year period beginning in 2025, with an option to extend the contract for an additional three years.
Posco-Pilbara Lithium Solution is a joint venture between Posco Holdings Inc. and Pilbara Minerals Ltd., with Posco holding an 82% stake and Pilbara Minerals holding 18%. The joint venture processes Australian lithium concentrate into high-purity lithium hydroxide at its production facility in Gwangyang, South Korea. This concentrate is sourced from lithium ore mined in Australia, providing a robust and high-quality supply chain.
This partnership marks a strategic shift for SK On, allowing the company to diversify its lithium hydroxide sourcing. Historically, SK On has heavily relied on imports from countries such as China, which has a dominant position in the global lithium hydroxide market. By establishing a domestic supply chain, SK On not only reduces its dependence on overseas suppliers but also gains more flexibility in negotiating favorable terms for raw material procurement. The agreement is expected to bolster SK On’s position in the competitive battery industry, which is increasingly focusing on securing stable and sustainable sources of critical materials.
The deal aligns with broader industry trends as battery manufacturers and automakers prioritize localized supply chains to mitigate risks related to global trade disruptions and geopolitical tensions. Domestic production of lithium hydroxide offers additional benefits, including reduced transportation costs and lower carbon emissions, further supporting SK On’s sustainability objectives.
As a leading battery manufacturer, SK On's collaboration with Posco-Pilbara Lithium Solution highlights its commitment to building a resilient supply chain while supporting local industry development. This agreement not only supports SK On's growth ambitions but also contributes to South Korea's efforts to strengthen its position in the global battery materials market. By leveraging domestic resources and fostering collaborations with key partners like Posco and Pilbara Minerals, SK On continues to solidify its leadership in the battery sector.
