South Korean battery manufacturer SK On has signed a contract with local battery materials firm Ecopro to supply lithium hydroxide for its production facilities in the United States, in a move aimed at securing subsidy eligibility under U.S. clean energy rules and reducing reliance on Chinese imports.
The agreement will see Ecopro supply up to 6,000 tonnes of lithium hydroxide produced in South Korea during 2024, according to Korean media reports. The material will be processed at SK On’s domestic cathode facilities before being shipped to its U.S.-based battery plants. This volume is estimated to support the production of batteries for approximately 100,000 electric vehicles.
The deal comes amid shifting policy landscapes in the U.S., including the Inflation Reduction Act (IRA), which ties full tax credit eligibility to vehicle components and materials sourced from approved countries. Although current U.S. policy supports such supply arrangements, reports indicate the Trump administration plans to phase out the credit entirely by the end of September.
Ecopro CEO Kim Yoon-tae described the agreement as “our first delivery of lithium hydroxide to a global battery manufacturer,” according to the Korea Herald. Ecopro began mass production of the material in 2021 and expects to reach a combined production capacity of 34,000 tonnes across South Korea and Hungary by year-end. The company also aims to increase global capacity to 79,000 tonnes by 2028, with a continued focus on the South Korean and U.S. markets.
The partnership is expected to help SK On diversify its supply chain, which has historically been heavily dependent on Chinese sources. The companies are reportedly in discussions for a multi-year supply contract that would cover the next two to three years.