SK On signs strategic lithium offtake MoU with ExxonMobil to enhance US supply chain
South Korea’s SK On has signed a non-binding memorandum of understanding (MoU) with energy and new mining giant ExxonMobil for a potential lithium offtake agreement in the United States.
The MoU was signed on the sidelines of the Fastmarkets Lithium Supply and Battery Raw Materials Conference in Las Vegas as part of SK’s efforts to strengthen its battery supply chain in the region.
Under the MoU, SK On—a leading global electric vehicle (EV) battery manufacturer—will look to formulate a multi-year agreement with ExxonMobil that allows the company to secure up to 100,000 metric tons of lithium from the latter’s project in Arkansas.
US battery plans
SK On is targeting new, stable sources of key battery minerals in the US, where the company is expanding its presence with a number of battery plants in development.
As part of SK Group—South Korea’s second-largest conglomerate—SK On currently operates two EV battery plants in the US state of Georgia.
The company is also building three US battery plants in a joint venture with Ford Motor Company, as well as another plant in Georgia with Hyundai Motor Group.
Power output target
After 2025, the annual production capacity of SK On in the US alone is expected to reach more than 180 gigawatt hours, enough to power about 1.7 million EVs a year.
ExxonMobil has a goal of supplying lithium for more than one million EV batteries annually by 2030 and supports the US initiative to build out a domestic EV supply chain.
The US-based giant has successfully produced lithium carbonate from the Smackover formation in southern Arkansas through the appraisal drilling program and a technology pilot using direct lithium extraction technology.
The project will extract lithium from underground saltwater deposits and convert it into battery-grade material onsite in Arkansas.
“The world needs more lithium to support its emissions goals and we’re doing our part to drive solutions forward in the United States,” said ExxonMobil president of low carbon solutions Dan Ammann.
“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.”
Oversupply concerns
The SK On and Exxon announcement comes as lithium supplies and EV sales are still falling.
Investment banking firm Citi has forecast that lithium prices will fall by as much as 20% over the coming months due to an oversupply of battery materials.
According to Citi, the price of lithium carbonate sold in China has dropped by 15% over the past month.
The global oversupply of lithium comes at the same time as EV sales in key markets such as the US have declined, with predictions that further falls will remain in place due to a supply glut.
The US recently proposed to introduce a significant tariff on Chinese-produced EVs in an attempt to counter the oversupply of cheap imports flooding the market.