SK On signs MOU to secure US-sourced lithium from ExxonMobil

SK On Co. has inked an MOU with ExxonMobil Corp. to buy lithium extracted by the US oil giant from a salt well in the US state of Arkansas. The deal would open the door for SK On to secure US-produced lithium, SK On said on Wednesday.

The South Korean rechargeable battery maker may explore a multi-year agreement to secure up to 100,000 tons of lithium from ExxonMobil in the US. Details of the supply volume and contract period will be decided after the two companies enter into a definitive agreement.

The MOU was signed on the sidelines of the Fastmarkets Llithium Supply and Battery Raw Materials Conference 2024, held in Las Vegas this week.

Last year, ExxomMobile made its foray into the battery materials market for electric vehicles (EVs) after acquiring the rights to a lithium well, dubbed Smackover Foundation Waters, in southern Arkansas.

The lithium well is estimated to have enough lithium to produce batteries for 50 million EVs.

The same year, it began drilling the salt well to extract lithium, utilizing direct lithium extraction (DLE) technology under which the mineral is extracted from underground salt water deposits.

The US oil and gas provider aims to produce enough lithium to supply the manufacturing needs of over 1 million EVs per year by 2030, ExxonMobil said in a statement released in November.

"This collaboration with SK On demonstrates the leading role we play in the growing market for domestically sourced lithium, advancing energy security and climate objectives, as well as supporting American manufacturing," Dan Ammann, president of ExxonMobil Low Carbon Solutions, said in a statement released by SK On on Tuesday.

In the DLE process, lithium is separated from the salt water. It produces less carbon emissions than hard rock mining, which requires rock blasting using explosives to excavate lithium.

Despite its higher initial facility investment cost, DLE technology boasts a shorter production period and lower water usage compared with traditional lithium drilling methods.

SK On is striving to strengthen its global supply chain for critical battery materials to cope with the US Inflation Reduction Act and the European Critical Raw Materials Act (CRMA).

The IRA is designed to grant up to $7,500 in tax credits to buyers of EVs whose final assembly is in North America and in which a certain portion of critical minerals and battery components are sourced from the region, or its trading partner.

The CRMA initiative aims to ensure the EU access to a secure, sustainable supply of critical raw materials to reduce net greenhouse gas emissions by at least 55% by 2030.

BATTERY MATERIAL SUPPLY DEALS IN US

This past February, SK On signed an agreement with Westwater Resources Inc. to buy US-processed graphite in North America starting in 2027.

In 2022, the SK Group arm inked a lithium hydroxide supply deal with Chile’s SQM. In 2019, it agreed to buy a significant volume of cobalt from Glencore via a six-year contract between 2020 and 2025.

US BATTERY PLANTS

SK On currently operates two EV battery plants in Commerce, Georgia, and is building an EV battery plant in Bartow County, Georgia, in a joint venture with Hyundai Motor Group.

In addition, it is building three battery plants in the US with Ford Motor Co.: two in Kentucky, and one in Tennessee.

After 2025, SK On expects its annual battery production capacity in the US to surpass 180 gigawatt hours — enough to power 1.7 million EVs per year.

“Through this partnership with Exxon Mobil, we will continue strengthening the battery supply chain in the US,” said Park Jong-jin, executive vice president of SK On's Strategic Procurement division.

Write to Hyung-Kyu Kim at khk@hankyung.com
Yeonhee Kim edited this article