SK On Company has signed a lithium hydroxide sourcing deal with local battery materials producer EcoPro Innovation Company, as the South Korean electric vehicle (EV) battery manufacturer continues to reduce its dependence on Chinese suppliers and meet the requirements of the US Inflation Reduction Act (IRA).

The deal provides for EcoPro to supply an initial 6,000 metric tons of domestically produced lithium hydroxide to SK On by the end of 2025, enough for around 100,000 electric vehicles. The lithium hydroxide, a key ingredient in battery cathodes and anodes, will be processed in South Korea, before being shipped to SK On’s battery manufacturing plants in the US.

Lithium hydroxide produced in South Korea qualifies for the IRA’s Advanced Manufacturing Production Credit, unlike lithium hydroxide sourced from China, helping US-based battery manufacturers such as SK On access tax credits and maximize their competitiveness in the US market.

Park Jong-jin, SK On’s head of strategic purchasing, said in a statement: “We are building a stable supply chain amid shifting global policies. Securing competitive materials and diversifying partners will boost our North American capabilities.”

EcoPro Innovation’s CEO, Kim Yoon-tae, confirmed that this is its first lithium hydroxide supply contract with a global battery manufacturer, representing a key milestone is its strategy to establish a strong presence in North American and European battery supply chains.