SK On Signs 1.1 Trillion Won LFP Cathode Deal with POSCO Future M to Strengthen U.S. ESS Supply Chain
To Be Used at Georgia Plant for Three Years Starting in 2027
Accelerating the Establishment of a Non-Chinese Supply Chain
SK On has signed a large-scale core materials supply contract with a Korean company to target the U.S. energy storage system (ESS) market and establish a supply chain independent of China.
On September 22, SK On announced that it had entered into an agreement with POSCO Future M for the supply of lithium iron phosphate (LFP) cathode materials worth approximately 1.1 trillion won for three years, from next year through 2029. The cathode materials procured under this contract will be exclusively used in LFP batteries for ESS produced at SK On's plant in Georgia, USA. The two companies also agreed to discuss extending the contract period after 2029, based on their long-term business partnership.
LFP batteries are secondary batteries that use iron and phosphate, which are less expensive than cobalt or nickel, resulting in enhanced cost competitiveness and lower fire risk. ESS is a large-scale battery system that stores electricity generated from sources such as power plants or solar energy and efficiently supplies it when needed. It is considered a core infrastructure for enhancing grid stability and expanding renewable energy.
The LFP cathode materials supplied to SK On are produced by applying new manufacturing technology to lithium sourced by POSCO Group from salt lakes in Argentina, which enhances both cost and quality competitiveness. POSCO Future M has recently converted part of the high-nickel cathode material production line at its Pohang plant to be dedicated for LFP production, and full-scale mass production will begin at the end of this year. Through this agreement, SK On expects to establish a supply chain for non-Chinese LFP cathode materials and to further strengthen its competitiveness in sourcing key materials for the North American ESS market.
Meanwhile, SK On is continuously expanding its North American ESS business. Last month, the company signed a supply contract for LFP battery cells with U.S.-based ESS specialist company Neovolta Power. In September last year, SK On also signed an ESS supply contract with Flatiron Energy Development, an American renewable energy developer.
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Kim Sungtan, Head of Raw Material Procurement at SK On, said, “In response to changes in the global energy market and the expansion of U.S. ESS demand, SK On is focusing on establishing a supply chain independent of China and strengthening its competitiveness in core materials. We will continue to pursue stable procurement of materials and market expansion in the ESS sector through differentiated sourcing capabilities and strategic partnerships with outstanding companies.”
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