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  • SK On to secure high quality lithium hydroxide for five years starting in 2023, further strengthening its supply chain in response to the IRA
  • Partnership to discuss mid-to long-term cooperation in various fields within the battery value chain

SK On, a global leading electric vehicle (EV) battery manufacturer, announced today it signed a lithium hydroxide supply deal with Chile’s SQM, a move that will further strengthen the company’s supply chain for critical battery materials in coping with the U.S. Inflation Reduction Act (IRA) following its recent deals with Australian lithium developers.

Attended by Jin Kyo-won, Chief Operating Officer at SK On, and Carlos Díaz Ortiz, Executive Vice President Lithium at SQM, the two companies held a signing ceremony for the lithium deal on November 4 at SK Group’s headquarter Seorin building in Seoul, South Korea.

SK On Signing Ceremony 1
SQM Executive Vice President Lithium Carlos Díaz and SK On Chief Operating Officer Jin Kyo-won pose for a photo after signing a lithium hydroxide supply agreement in Seoul, South Korea, on Nov. 4, 2022.

Under the deal, SK On shall purchase up to 57,000 tons of high-quality lithium hydroxide for five years starting in 2023. This amount is enough to produce batteries for approximately 1.2 million electric vehicles (EVs).

In addition to the supply deal, SK On and SQM agreed to discuss a mid-to long-term partnership to enhance their cooperative relationship, including additional lithium supply, potential investment in production plants, and waste battery recycling.

Prior to the signing ceremony, Diaz and his delegation visited SK On’s battery plant in Seosan, South Chungcheong Province, and toured the company’s state-of-the-art manufacturing system.

The deal with SQM is expected to boost SK On’s efforts to meet the IRA requirements as Chile is a free trade agreement (FTA) partner with the U.S. The IRA is a law that offers a tax credit to consumers when they buy an EV with batteries equipped with a certain percentage of critical minerals extracted or processed in the U.S. or in the countries whose FTA with the U.S. is in effect.

Established in 1968 and listed in the Santiago and New York stock exchanges, SQM is the only lithium hydroxide producer in Chile.

Through cooperation with SQM, SK On is expected to not only stably secure critical minerals, but also further enhance competitiveness in ESG (environmental, social, governance). SK On has played a leading role in establishing a sustainable battery supply chain by participating in major eco-friendly initiatives such as Global Battery Alliance and Responsible Mineral Imitative.

SQM is currently one of the lithium-producing companies with the lowest carbon and water footprint in the world and is fully committed with the environment. Consistent with that commitment, SQM joined the Initiative for Responsible Mining Assurance (IRMA) in 2020 to ensure ethical and environmentally friendly lithium mining. In accordance with IRMA standards, the Atacama site conducts independent third-party audits in areas such as worker health and safety, human rights, community engagement, and pollution control.

SK On has been steadily reinforcing its supply chain for key battery materials. Last month, it signed a lithium supply deal with Lake Resources to receive battery-grade lithium for a maximum 10 years from the fourth quarter of 2024 after acquiring 10 percent stake in the Australian firm.

SK On Signing Ceremony 3
Representatives from SK On and SQM, including SK On Chief Operating Officer Jin Kyo-won (4th from right), SQM Executive Vice President Lithium Carlos Díaz (5th from right) pose for a photo after signing a lithium hydroxide supply agreement in Seoul, South Korea, on Nov. 4, 2022.

In addition, SK On secured various contracts on key battery materials with global suppliers, including a memorandum of understanding (MOU) on lithium supply with Australia’s Global Lithium Resources, a cobalt supply contract with Switzerland’s Glencore, and an MOU with Korea’s POSCO Holdings on comprehensive business cooperation in the battery business.

“The deal with SQM is a part of our business strategy to support global production expansion and proactively respond to changes in the external environment,” said Jin Kyo-won, COO at SK On. “SK On's supply chain for critical minerals has been further strengthened in cooperation with SQM, which has proven excellent quality and reliability.”

Carlos Díaz Ortiz, Executive Vice President Lithium at SQM said, “We are pleased to strengthen our business with SK On, a leading battery manufacturer which has been rapidly increasing its market share in the global battery market.” He added, “We will create synergy by carrying out various cooperation in the value chain beyond the supply of lithium hydroxide to SK On.”

SK On’s key material suppliers that meet the IRA requirement

Supplier

Country

Announcement

Deal

Note

SQM

Chile

November2022

57,000 tons of lithium from 2023 to 2027

Lake Resources

Australia

October 2022

Maximum of 230,000 tons of lithium from the fourth quarter of 2024

Initial five-year term with an option for an additional five years

Global Lithium

Australia

September 2022

MOU for a stable supply of lithium

Syrah

Australia

July 2022

MOU for a stable supply of graphite

MOU with Ford and SK On

POSCO Holdings

Korea

June 2022

Joint investment in raw materials such as lithium and nickel

MOU for comprehensive business cooperation

Glencore

Switzerland

December 2019

30,000 tons of cobalt from 2020 to 2025

About SK On

SK On is a global leading electric vehicle (EV) battery developer, manufacturer, and solutions provider whose mission is to make our world a cleaner and more convenient place.

Established in October 2021 after splitting off a battery business from SK Innovation, South Korea’s largest energy company, SK On aims to become a world leader in the clean energy industry by leveraging its global production base and R&D capabilities, as well as its production and quality management know-how.

Headquartered in Seoul, South Korea, SK On has a worldwide presence with battery plants currently operating or in construction across the United States, Europe, and Asia.

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