SK On is strengthening its response capability to the Inflation Reduction Act (IRA) by expanding its lithium supply chain.
On June 24 (local time), SK On announced that they signed a lithium supply memorandum of understanding (MOU) with ExxonMobil at the world’s largest lithium and battery materials conference, the Fastmarkets Conference, held in Las Vegas.
The signing ceremony was attended by Park Jong-jin, the Vice President in charge of strategic purchasing at SK On, and Dan Holton, Vice President of ExxonMobil’s Low Carbon Solutions business.
Through this MOU, SK On will secure up to 100,000 tons of lithium produced using ExxonMobil’s Direct Lithium Extraction (DLE) technology from the lithium brine in Arkansas. Specific supply times and quantities will be confirmed after the formal contract is signed.
ExxonMobil, the largest oil company in the U.S., acquired the Arkansas brine in early 2022 to enter the battery materials business, beginning lithium extraction in November of the same year.
It is estimated that the brine contains 4 million tons of lithium carbonate equivalent, enough to produce batteries for 50 million electric vehicles. ExxonMobil aims to supply lithium equivalent to batteries for 1 million electric vehicles annually starting in 2030.
DLE technology refers to the direct extraction of lithium from brine through processes such as adsorption. It is more environmentally friendly than traditional hard rock mining, with lower carbon emissions. Although initial capital investment is high, it has advantages such as shorter production times and lower water usage compared to the conventional method of evaporating brine to obtain lithium.
The IRA provides consumers with a tax credit of up to $7,500 for qualifying vehicles purchased from electric vehicles assembled in North America.
SK On continues to work on establishing a global supply chain for core minerals to respond to rapidly changing global industrial policies, including the IRA and the EU Critical Raw Materials Act (CRMA).
Notable agreements include a natural graphite supply purchase contract with Westwater in February of this year and a lithium supply contract with Chile’s SQM in November 2022. In December 2019, they also signed a cobalt purchase agreement with Switzerland’s Glencore.
Vice President Park stated, “We will continue to strive to secure core minerals that meet IRA requirements to ensure the interests of consumers in our key market, North America.”
Dan Ammann, President of ExxonMobil’s Low Carbon Solutions business, said, “To achieve carbon reduction, more lithium is needed, and we are working to provide solutions within the U.S. This collaboration with SK On is part of those efforts and will also contribute to strengthening energy security and revitalizing manufacturing.”
Contact: Lee Sang-jin daedusj@autodiary.kr