SK On Speeds Up Localization of LFP Cathode Materials with KRW 160 Billion Contract with L&F

[Financial News] SK On has begun securing lithium iron phosphate (LFP) cathode materials, a key battery component, to meet growing global demand for energy storage systems (ESS).
SK On announced on the 17th that it had signed an agreement with L&F to purchase LFP cathode materials at its Gwanhun Campus in Jongno District, Seoul.
Under the agreement, SK On will receive approximately KRW 160 billion worth of high-density, third-generation LFP cathode materials from L&F over three years, from 2026 to 2028. The materials will be used at LFP battery cell production lines for ESS applications at the Seosan Plant in South Chungcheong Province and a plant in Georgia, U.S.
The two companies also left open the possibility of extending the agreement for up to three additional years after 2028, depending on market conditions, supply performance and changes in customer demand. The arrangement is intended as a long-term partnership rather than a one-off transaction.
SK On plans to use the LFP cathode materials secured through the agreement at LFP battery cell production lines for ESS applications at its Seosan Plant in South Korea and its plant in Georgia, U.S. The company is expected to further strengthen its competitive edge in the Korean and U.S. ESS markets by establishing a stable supply chain for non-Chinese LFP cathode materials.
In February this year, SK On won 284 megawatts (MW), or approximately 50.3%, of the total 565 MW capacity in South Korea's second ESS central contract market auction. Last month, it expanded its ESS business by signing an LFP battery cell supply agreement worth approximately KRW 1.5 trillion with U.S. ESS company NeoVolta Power.
The company is also reorganizing its production system in line with the increase in volume. The Seosan Plant plans to convert 3 gigawatt-hours (GWh) of its total 7 GWh production capacity into an ESS LFP battery line and begin shipping products in the first half of next year. The Georgia plant will also convert some of its lines to dedicated ESS LFP production.
Kim Seong-tan, head of raw-materials purchasing at SK On, said, "As supply chains in the global ESS battery market accelerate their shift away from China, we proactively secured high-quality, domestically produced LFP cathode materials through a mid- to long-term supply agreement." He added, "This agreement will further strengthen SK On's competitiveness in LFP battery materials."

[email protected] Kim Dong-chan Reporter