SK On Teams Up with US Graphite Firm for Inflation Reduction Act
TL/DR –
SK On, the battery-making unit of South Korea’s SK Group, has partnered with US-based graphite producer Westwater Resources to secure natural graphite for electric vehicle batteries. The collaboration responds to the US government’s Inflation Reduction Act, which offers tax credits to EVs assembled in North America using a certain percentage of core minerals extracted in the region. Westwater will supply SK On with natural graphite from its Alabama plant between 2027 and 2031, thus helping the South Korean firm establish a US-based supply chain.
SK On Ties Up with Westwater Resources for Secure Natural Graphite Supply
SK On, the South Korean battery production unit of SK Group, has formed a strategic partnership with U.S-based graphite producer, Westwater Resources, to ensure a secure supply of natural graphite, a key component for electric vehicle batteries. This move is a reaction to the U.S. Inflation Reduction Act.
The Inflation Reduction Act (IRA), enacted in August 2022, provides tax credits for EVs assembled in North America using a certain percentage of raw minerals sourced from the region or countries with U.S. Free Trade Agreements. From 2025, no subsidies will be offered for minerals procured from Foreign Entities of Concern (FEOC), including firms under the influence of governments labeled as “countries of concern”.
The Importance of Natural Graphite in EV Batteries
Cathodes, largely consisting of natural graphite, are crucial components of lithium-ion batteries, dictating battery life and charging speed. Currently, China dominates with approximately 85% of global cathode production. In 2022, South Korea imported natural graphite worth $130 million, with more than 93% sourced from China, according to the Korea International Trade Association (KITA).
Details of the SK On and Westwater Partnership
On February 12, SK On announced that Westwater Resources will supply natural graphite from its Alabama plant between 2027 and 2031. SK On has the option to purchase up to 34,000 tons during this period. Westwater is currently constructing the “Kellyton Graphite Plant” in Alabama with an annual production capacity of 7,500 tons. Furthermore, Westwater holds the rights for graphite exploration and mining in a 170 million square meter-wide area in Alabama’s Coosa County.
“This partnership with a globally renowned EV battery manufacturer is exciting and assists SK On in establishing a U.S-based supply chain,” said Terence Cryan, Westwater’s executive chairman. “This agreement is also an important step towards securing the additional financing needed to complete Phase I of our Kellyton Graphite Plant.”
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