Dan Holton (left), senior vice president of ExxonMobil Low Carbon Solutions and Park Jong-jin, executive vice president of Strategic Procurement at SK On
SK On Co. has inked a memorandum of understanding (MOU) with ExxonMobil Corp. to buy lithium extracted by the US oil giant from a salt well in Arkansas, which would open the door for SK On to secure US-produced lithium, the South Korean rechargeable battery maker said on Wednesday.
SK On can 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 determined 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 after acquiring the rights to a lithium well, or Smackover Foundation Waters, in southern Arkansas.
The lithium well in the US state is estimated to have sufficient lithium to produce enough batteries for 50 million EVs.
The same year, it began drilling the salt well to extract lithium, utilizing the direct lithium extraction (DLE) technology, under which the mineral is extracted from underground salt water deposits.
By 2030, the US oil and gas provider aims to be producing enough lithium to supply the manufacturing needs of over 1 million EVs per year, ExxonMobil said in a setatement released last 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 fewer carbon emissions than hard rock mining that requires rock blasting with explosives for lithium excavation.
Despite its higher initial facility investment cost, the DLE technology boasts shorter production period and lower water usage, compared with the 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 finally assembled in North America and sourc a certain portion of critical minerals and battery components from the region, or its trading partner.
The CRMA is an initiative to ensure the EU access to secure and sustainable supply of critical raw materials to reduce net greenhouse gas emissions by at least 55% by 2030.
BATTERY MATERIAL SUPPLY DEALS IN US
In February this year, SK On signed an agreement with Westwater Resources Inc. to buy US-processed graphite in North America from 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 in a six-year contract between 2020 and 2025.
US BATTERY PLANTS
SK On is currently operates two EV battery plants in Commerce, Georgia. It is also building an EV battery plant in Bartow County in the state as a joint venture with Hyundai Motor Group.
Additionally, it is building three battery plants in the US with Ford Motor Co.: two in Glendale, Kentucky and one in Stanton, Tennessee.
After 2025, SK On expects its annual battery production capacity in the US to reach more than 180 gigawatt hour, enough to power about 1.7 million EVs a year.
“Through this partnership with Exxon Mobil, we will continue strengthening battery supply chain in the US,” said Park Jong-jin, executive vice president of the Strategic Procurement division at SK On.
By Hyung-Kyu Kim
khk@hankyung.com
Yeonhee Kim edited this article
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