SK On and POSCO Future M have signed a "cathode alliance." First, POSCO Future M will become a materials supplier that delivers both cathode and anode materials to all three Korean battery companies (LG Energy Solution, Samsung SDI, and SK On). Meanwhile, SK On will be able to secure non-Chinese cathode materials for use in batteries for energy storage systems (ESS).
SK On and POSCO Future M announced on the 22nd that they signed a 1.742 trillion won LFP (lithium iron phosphate) cathode supply contract. The contract period runs from 2027 to 2029. Under the agreement, the two companies can extend the supply contract for an additional two years.
This marks the first time POSCO Future M will supply cathode materials to SK On. Until now, it has supplied both cathode and anode materials to LG Energy Solution and Samsung SDI, while providing only anode materials to SK On. This contract is expected to further solidify the materials alliance with all three domestic battery companies. A POSCO Future M official explained, "This will allow us to expand our customer portfolio and further strengthen our mid-to-long-term growth foundation."
POSCO Future M is actively responding to customer demand by adding LFP cathode materials to its existing portfolio centered on ternary systems (NCM·NCA). Recently, it completed converting part of its high-nickel cathode production line at the Pohang plant in Gyeongbuk into an LFP cathode production line. It plans to begin supplying Yangsan from the end of this year. POSCO Future M intends to continuously expand its production capacity by converting additional lines according to orders received.
Cooperation on raw material supply chains at the POSCO Group level is also a strength. POSCO Future M has decided to produce and supply LFP cathode materials with enhanced cost competitiveness and quality by applying new processes utilizing lithium from salt lakes in Argentina in the future.
LFP batteries have lower output compared to ternary system batteries such as NCM (nickel-cobalt-manganese) and NCA (nickel-cobalt-aluminum), but their strengths lie in price competitiveness and long lifespan. With the recent surge in power demand due to expansions of data centers for AI (artificial intelligence), demand for LFP batteries for ESS to ensure stable power supply is growing. In the electric vehicle market, there is also a trend toward adopting LFP batteries, particularly for entry-level models. Based on its supply chains and technological capabilities that can respond to global trade regulations, as well as a diverse product portfolio, POSCO Future M continues to negotiate cathode and anode material supply agreements with major battery and automaker companies.
In the case of SK On, this cathode material will be used in the production of LFP batteries for ESS at its Georgia plant in the United States. This contract is seen as significant for establishing a non-Chinese LFP cathode supply chain. It is expected to further strengthen its competitiveness in sourcing key materials in the U.S. ESS market. Establishing a non-PFE (non-foreign entity of concern) value chain is also crucial to properly receive incentives such as AMPC (Advanced Manufacturing Production Credit) in the United States.
In fact, SK On is accelerating its expansion of the North American ESS business. In August, it secured an LFP battery cell supply contract with U.S. ESS company Neovolta Power. Last September, it signed an ESS supply contract with Flatiron Energy Development, a U.S. renewable energy company.
Kim Sung-tan, SK On's So Jae-gu-mae (Head), stated, "We are focusing on building non-Chinese supply chains and strengthening competitiveness in key materials to align with changes in the global energy market and the expansion of ESS demand in the United States." He added, "Moving forward, we will continue to pursue stable material procurement and market expansion in the ESS market through differentiated purchasing capabilities and strategic cooperation with excellent companies."
in INDUSTRY
