SK On secures lithium deal with Posco to power EV batteries

SK On has signed a supply agreement with Posco Holdings to secure up to 25,000 tons of lithium from Posco Argentina’s salt lake operations, according to a statement on February 25.

The deal aims to support SK On’s EV battery production in Europe and North America, regions seeking to reduce reliance on China for raw materials. The lithium supplied is enough for about 400,000 electric vehicles.

Given China’s dominance in lithium refining, supply chain stability has become a concern amid rising geopolitical risks.

North American and European policies, including US EV tax credits and EU regulations, promote diversification away from Chinese suppliers.

🔗 Source: Korea Herald

🧠 Food for thought

Implications, context, and why it matters.

The supply deal fits into a wider industrial push

SK On is not relying on one contract. It has long-term lithium hydroxide supply from Chile’s SQM (Sociedad Química y Minera de Chile, a large lithium producer) plus lithium from Australia’s Lake Resources to spread sourcing risk 1.
Supply under this agreement traces back to POSCO Group/Posco Holdings’ investment in Argentina’s Hombre Muerto salt lake region, where POSCO Holdings has held mining rights since 2018 2.
POSCO Holdings also plans KRW 1.1 trillion in total investment to lock in lithium resources in Australia and Argentina. The plan ties to its “materials patriotism” framing and its goal of becoming a leading lithium company 2.

Korean firms are reshaping supply chains with China in the mix

The arrangement helps SK On obtain raw lithium outside China. It does not mean a full break from Chinese companies.
Battery materials makers in South Korea, including POSCO, are also forming joint ventures with Chinese firms such as CNGR and GEM (Chinese battery materials companies) to build precursor plants inside South Korea. Precursor plants make intermediate materials used in battery cathodes 3.
This route draws on Chinese processing know-how plus funding, then keeps later production steps in a country with a U.S. free trade agreement. That matters for U.S. EV tax credits and EU rules that push diversification away from Chinese suppliers 1.
The result is a sturdier setup that sources raw minerals beyond China, then uses Chinese expertise within politically friendly borders.