SK On signs deal to develop EV battery anodes with Urbix

Urbix employees work at the plant in Arizona. [URBIX]

SK On will co-develop anodes with Arizona-based Urbix in an effort to reduce its dependency on China after the passage of the U.S. Inflation Reduction Act (IRA).

The Korean battery maker said Thursday it signed a two-year joint development agreement with the graphite producer to develop eco-friendly anodes, one of four critical materials in making electric vehicle (EV) batteries that handles the lifespan, energy density, and charging speed.

Graphite is a raw material used in making anodes.

The developed anodes will be produced for SK On's U.S. plants. It has two independent plants in Georgia and three more joint plants with Ford are under construction in Kentucky and Tennessee.

Established in 2014, Urbix specializes in processing natural graphite for battery anodes. It has been constructing an Arizona manufacturing plant with an annual capacity of 1,000 tons. That will increase to 28,500 tons by 2025.

Global battery makers are highly dependent on China for battery components. Nearly 85 percent of anodes come from China, according to data from the International Energy Agency.

Diversifying the supply chain is one of SK On's latest focuses, as the IRA restricts tax incentives on EVs that are made with components manufactured in China.

The company signed deals with Chile-based Sociedad Química y Minera de Chile (SQM) and Australian Lake Resources to source lithium, a critical material of cathodes.

"SK On is reviewing various options to secure raw materials," said Sun Hee-young, vice president in charge of advanced research at SK On. "We will rather make the IRA an opportunity by diversifying our supply chain."

The IRA, signed by U.S. President Joe Biden last August, grants up to $7,500 in tax credits to buyers of EVs assembled in North America.

The rule extends to the origin battery components and critical minerals, though the U.S. government said it has delayed the application of the rule until March. They were originally scheduled to go into effect on Jan. 1.

When the tax provision on battery components is implemented after March, 40 percent of a vehicle's critical-mineral value will have to come from the United States or countries with which the United States has signed free trade agreements to qualify for $3,750 of the credit.

That qualification increases 10 percentage points a year to 80 percent in 2027.

Fifty percent of the battery-component value will have to come from the United States to qualify for another $3,750 of the tax credit. That number will increase 10 percentage points a year to 100 percent by 2029.

BY SARAH CHEA [chea.sarah@joongang.co.kr]