SK On and L&F are collaborating to establish a domestic supply chain for lithium iron phosphate (LFP) battery materials, enhancing their response capabilities in the energy storage system (ESS) market.
On September 17, SK On signed a supply contract for LFP cathodes with L&F at its headquarters in Jongno-gu, Seoul.
Under this agreement, SK On will receive LFP cathodes worth 160 billion won from L&F for the production of ESS batteries over the next three years, from 2026 to 2028.
The two companies plan to discuss extending the supply contract for up to three additional years after 2028, based on market conditions, supply performance, and customer demand.
SK On intends to use the LFP cathodes secured through this contract in its production lines for ESS LFP battery cells at its factories in Seosan, South Korea, and Georgia, USA.
With a stable supply chain for non-Chinese LFP cathodes, SK On expects to further solidify its competitive edge in the domestic and U.S. ESS markets.
In fact, SK On demonstrated its business competitiveness by securing over half of the total 565 MW in the second ESS central contract market bid in February, winning 284 MW (approximately 50.3%). In August, it expanded its ESS business by signing a supply contract for LFP battery cells with U.S. company NeoVolta Power.
To accommodate the increased orders, SK On is also accelerating the reconfiguration of its production lines. The Seosan plant will convert 3 GWh of its total 7 GWh capacity to produce ESS LFP batteries, with deliveries expected to begin in the first half of next year. The Georgia plant will also convert some lines for exclusive LFP battery production.
L&F completed a dedicated LFP cathode factory in the Daegu Dalseong Industrial Complex in May. After stabilizing production and verifying quality, L&F shipped its first mass-produced LFP cathodes from its production line at the end of July. The cathodes supplied to SK On are high-density third-generation LFP cathodes that achieve higher energy density compared to standard LFP cathodes.
Kim Seong-tan, head of raw material procurement at SK On, stated, "As the global ESS battery market begins to diversify its supply chains away from China, we have proactively secured high-quality domestic LFP cathodes through this long-term supply contract. This agreement will significantly enhance SK On's competitiveness in LFP battery materials."
Lee Byeong-hee, COO of L&F, remarked, "This contract is a recognition of L&F's competitiveness in LFP products, customer responsiveness, and early mass production capabilities. We will continue to expand our customer base in the ESS and affordable EV markets based on stable mass production capabilities and differentiated product competitiveness, aiming to become a leading supplier of core materials in the global non-Chinese LFP supply chain."
* This article has been translated by AI.
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