SK On Establishes Domestic Supply Chain for Lithium Hydroxide

SK On Co. has entered into a long-term agreement with POSCO-Pilbara Lithium Solution to secure a domestic supply of lithium hydroxide, a critical component for battery cathodes, as reported by several media reports. The deal was signed in Seoul on Friday and marks a significant step in strengthening the company’s supply chain for battery materials. Under the terms of the agreement, SK On will receive up to 15,000 tons of domestically produced lithium hydroxide over a three-year period beginning in 2025. The agreement also includes an option for a three-year extension, providing flexibility and stability in the supply of this essential material.

POSCO-Pilbara Lithium Solution is a joint venture formed between POSCO Holdings Inc. and Pilbara Minerals Ltd., with the former holding an 82% stake and the latter 18%. The company operates a production facility in Gwangyang, South Korea, where it processes Australian lithium concentrate into high-purity lithium hydroxide. This concentrate is derived from lithium ore mined in Australia, ensuring 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 relied heavily on imports from countries such as China, which has dominated the global lithium hydroxide market. By establishing a domestic supply chain, SK On not only reduces its reliance on overseas suppliers but also enhances its ability to negotiate favorable terms for raw material procurement. The agreement is expected to strengthen the company’s overall position in the competitive battery industry, which is increasingly focused on securing stable and sustainable material sources.

The deal also aligns with broader industry trends, as battery manufacturers and automakers prioritize localized supply chains to mitigate risks associated with global trade disruptions and geopolitical tensions. The domestic production of lithium hydroxide offers added advantages, including reduced transportation costs and lower carbon emissions, further aligning with SK On’s sustainability goals.

As a leading battery manufacturer, SK On’s partnership with POSCO-Pilbara Lithium Solution underscores its commitment to ensuring the resilience of its supply chain while supporting the development of local industries, according to the several media reports. The agreement not only supports the company’s growth ambitions but also contributes to the broader effort to strengthen South Korea’s position in the global battery materials market. By leveraging domestic resources and fostering collaborations with key players like POSCO and Pilbara Minerals, SK On continues to solidify its role as a leader in the battery sector.