United States secures Korean lithium hydroxide for reinforcement in domestic battery production
South Korea's SK On, a key player in the electric vehicle (EV) battery market, has announced a strategic supply agreement with EcoPro Innovation. This deal is set to strengthen SK On's North American operations and directly impact the US battery market under the Inflation Reduction Act (IRA).
The agreement ensures a secure and domestic-oriented supply of lithium hydroxide, a critical battery material, to SK On's US battery plants. This move is in line with the IRA's stringent requirements on domestic sourcing and content in battery manufacturing.
By securing lithium hydroxide supply from EcoPro Innovation, a company positioned to supply batteries made or assembled in the US, SK On can better meet these regulations. This compliance not only helps SK On's US battery production to qualify for IRA subsidies or tax credits but also enhances its competitiveness and growth potential in the rapidly expanding EV and energy storage markets.
EcoPro Innovation, which began mass production of lithium hydroxide in 2021, plans to expand its global capacity to 79,000 tons by 2028, focusing on Korea and the US. The company has already achieved a combined production capacity in Korea and Europe of 34,000 tons by the end of this year.
This alignment between a Korean supplier and US battery production under the IRA highlights the evolving international supply chain strategies companies adopt to navigate new geopolitical trade incentives in advanced battery materials.
In addition, Kim Yoon-tae, CEO of EcoPro Innovation, stated that the agreement marks their first lithium hydroxide supply deal with a major global battery maker. He also mentioned that EcoPro Innovation will accelerate efforts to secure customers in North America and Europe.
SK On Co., a subsidiary of South Korea's SK Group, has secured a supply agreement for 6,000 tons of domestically produced lithium hydroxide from EcoPro Innovation Co. The material will be processed at SK on's domestic cathode plants and shipped to its battery manufacturing facilities in the United States.
It's worth noting that Korean-made lithium hydroxide qualifies for the Advanced Manufacturing Production Credit (AMPC) under the U.S. Inflation Reduction Act (IRA), providing a competitive edge in cost structure for U.S.-bound battery production. However, no new information about the cost reduction associated with customs and transportation was provided in this announcement.
SK On is actively building a stable raw materials supply chain in response to global policy shifts and a rapidly evolving market environment. The company aims to continue strengthening its North American operations through strategic partnerships and competitive sourcing.
Last year, 82.7 percent of Korea's lithium hydroxide imports came from China. This deal aims to help SK on diversify its lithium hydroxide supply chain, reducing its reliance on a single country for this key raw material.
In conclusion, the SK On–EcoPro supply deal provides lithium hydroxide targeted for US battery manufacturing. This supports compliance with the IRA's domestic content requirements, which favor batteries using US-sourced or approved trade partner raw materials. Consequently, the agreement helps SK On strengthen its position in the US battery market amid IRA-driven growth and incentivization.
The supply agreement between SK On and EcoPro Innovation ensures a secure domestic-oriented supply of lithium hydroxide, a critical battery material, for SK On's US battery plants. This move aligns with the IRA's stringent requirements on domestic sourcing and content in battery manufacturing, allowing SK On to comply with regulations and qualify for IRA subsidies or tax credits.
EcoPro Innovation plans to expand its global capacity of lithium hydroxide production, focusing on Korea and the US, which will strengthen SK On's raw materials supply chain and reduce its reliance on a single country for this key raw material.
