SK On will source natural graphite from its U.S. anode material partner, Westwater Resources.
With the acquisition of U.S.-sourced graphite, SK On is poised to enhance its response capabilities to the Inflation Reduction Act (IRA).
On the 12th, SK On announced that it has signed a natural graphite supply contract with Westwater. Westwater will supply natural graphite produced at its processing plant in Kellington, Alabama, to SK On’s U.S. facilities from 2027 to 2031. This is a ‘conditional off-take’ agreement, where SK On will purchase if the developed materials meet specific conditions at a pre-agreed price. Depending on the growth rate of the North American electrification market, a maximum of 34,000 tons can be purchased during the contract period.
Following a battery anode material co-development agreement signed last May, the two companies are expanding their partnership further. SK On plans to use the anode material made from graphite refined by Westwater in its developing batteries and will work together to enhance the performance of these batteries. This expansion in collaboration to purchase natural graphite, the raw material for anode materials, is expected to significantly boost IRA response capacity.
According to the IRA, starting in 2025, if core minerals used in batteries are procured from foreign entities of concern, electric vehicle subsidies cannot be received in the U.S. However, for graphite, a core material for anodes, the global supply chain is heavily reliant on Chinese companies designated as FEOC. As a result, the battery industry is demanding a minimum two-year extension for the application of FEOC regulations on graphite until the end of 2026 to secure new technologies and supply sources.
Anode materials, along with cathode materials, separators, and electrolytes, are one of the four essential components of lithium-ion batteries. They determine the battery’s lifespan and charging speed. Graphite is the key raw material, making up about 95% of anode materials. This material is particularly noted for its high dependence on China, accounting for approximately 85% of global anode production.
In 2022, SK On signed a memorandum of understanding for natural graphite supply with Australia’s Syrah Resources and further established a co-development agreement with Urbix in January last year for anode materials. For cathode materials, SK On has strengthened its procurement capabilities by contracting with Chile’s SQM and Australian companies such as Lake Resources and Global Lithium.
Westwater, listed on the NASDAQ, was established in 1977 and initially conducted uranium-related businesses but transformed into a battery anode material development company after acquiring a graphite company in 2018. The company holds exploration and mining rights for the 17,000-hectare Coosa graphite deposit in Alabama, and currently, it is constructing a graphite processing plant aiming for production of 7,500 tons annually by 2024.
Jong-jin Park, vice president of SK On (in charge of strategic sourcing), stated, “We will continuously collaborate with local leading raw material companies to actively respond to the IRA.”
Terence Cryan, chairman of Westwater, expressed, “I am very pleased to collaborate with SK On, a leader in the global electric vehicle battery market, and to support SK On in strengthening its supply chain.”
Lee Sang-jin daedusj@autodiary.kr