SK on has announced a supply agreement to receive natural graphite from its American anode material partner, Westwater Resources. This acquisition of American-sourced graphite strengthens SK on’s response capability to the Inflation Reduction Act (IRA).
On Feb. 12, SK on disclosed that it had finalized a natural graphite supply contract with Westwater. According to the agreement, Westwater will supply natural graphite produced at its refinement plant in Kellyton, Alabama, to SK on’s manufacturing facility in the U.S. from 2027 to 2031. This is a conditional off-take agreement that allows purchasing at a pre-agreed price if the developed material meets specific criteria. Depending on the growth pace of the North American electrification market, up to 34,000 tons can be purchased throughout the contract duration.
Following a joint development agreement for battery anode materials signed in May 2023, the partnership between the two companies has now been further expanded. They plan to apply the refined graphite from Westwater in SK on’s batteries under development and collaboratively enhance their performance. By extending cooperation to the purchase of natural graphite, a raw material for anode materials, they anticipate a significant boost in their IRA response capabilities.
According to the IRA, starting from 2025, electric vehicles (EVs) that source critical minerals from Foreign Entities of Concern (FEOC) will be ineligible for EV subsidies in the United States. Currently, the global supply chain for graphite, a key material for anode substances, is almost entirely dependent on Chinese companies designated as FEOCs. Consequently, the battery industry is lobbying for at least a two-year postponement, until the end of 2026, on applying FEOC regulations to graphite 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, significantly affecting battery life and charging speed. Graphite, which accounts for about 95% of anode materials, is primarily sourced from China, which produces approximately 85% of the world’s anode materials, highlighting a high dependency on Chinese suppliers.
Following a memorandum of understanding signed with Australia’s Syrah Resources in 2022 for the supply of natural graphite, SK on also entered into a joint development agreement with Urbix in January 2023. In addition to securing battery materials, SK on has been strengthening its acquisition capabilities by signing contracts with Chile’s SQM, Australian companies Lake Resources, and Global Lithium for cathode materials.
Park Jong-jin, vice president and strategic purchasing lead at SK on, stated, “We will continue to actively respond to the IRA by consistently pursuing collaborations with leading local raw material companies.”