Clean lithium developer Lake Resources (ASX: LKE) has secured its second offtake deal in a week, this time entering a conditional framework agreement to supply South Korean electric vehicle (EV) battery company SK On with lithium carbonate from its Kachi brine project in Argentina.
Under the terms of the deal, SK On will acquire a 10% stake in Lake and purchase up to 25,000 dry metric tonnes per year of battery-grade lithium, which represents an offtake of 50% of Kachi lithium product.
The agreement is for an initial five-year term with the option to extend for a further five years.
This latest deal follows Lake’s conditional framework agreement with Dutch company WMC Energy announced six days ago. That arrangement also secured offtake of 25,000tpa of lithium product from Kachi and included a 10% strategic investment in Lake by WMC.
Investment underpins Kachi project development
Lake executive chairman Stu Crow said the framework agreement adds to the equity component required for the drawdown of debt facilities for Kachi’s development.
“The CFA delivers a long-term strategic agreement with SK On, one of the world’s pre-eminent lithium-ion battery producers with a major growing presence in the North American market,” he added.
SK On split from South Korea’s largest energy company SK Innovation last year and has established itself as a global leading EV battery developer and manufacturer. The company has battery production facilities operating in the United States, China, Hungary and Korea, and supplies batteries to major automakers including Ford Motor Company, Hyundai Motor Company and Volkswagen.
Access to similar lithium projects
Lake’s newly-appointed chief executive officer and managing director David Dickson said the new offtake agreement cements an ability to scale-up environmentally responsible production and offers SK On the opportunity to participate in Lake’s other projects.
SK On vice president Jinsuk Ryu also commented on the deal, saying it allows SK On to secure a stable lithium supplier for its US supply chain.
“With this CFA, both parties will strengthen mutual partnership to advance opportunities to secure sustainable sources of raw materials in the future,” she said.
The agreement is subject to standard conditions including finalisation of a definitive feasibility study, the performance of the Lilac demonstration plant, financial due diligence and the lithium offtake meeting product specifications.
