SK On to build $945 million precursor plant in joint venture

Bird's-eye view of Saemangeum economic zone where SK On will build a new plant [Saemangeum Development and Investment Agency]

Korean battery maker SK On will build a 1.21 trillion-won ($945 million) manufacturing facility on the country's southwest coast in a joint project with local materials producer EcoPro and China's Green Eco-Manufacture (GEM).

Under an agreement due to be signed Friday, the three companies plan to spend up to 1.21 trillion won for what will be their second joint venture to construct a plant for precursor, key materials used in electric vehicle battery.

The precursor plant, to be located in Saemangeum, a reclaimed area on the country's southwest coast, aims for an annual production capacity of 50,000 tons, equivalent to powering about 300,000 electric vehicles.

Construction is set to be completed in 2024.

The trio of companies signed in November last year their first venture deal to build a facility in Indonesia to produce mixed hydroxide precipitate (MHP), an intermediate nickel product for battery precursors.

A precursor refers to a specific chemical form containing nickel, cobalt, manganese and aluminum before it is turned into cathodes, a key secondary battery material that determines the power and range of electric vehicle batteries.

Precursors account for 65-70 percent of the cost of cathodes.

The Indonesian venture will supply the Saemangeum plant with the MHP to be used as feedstock for precursors.

It aims to produce MHP that contains 30,000 tons of high-purity nickel starting in 2024.

SK On has been bolstering efforts to strengthen its battery components supply chains amid the changing industry landscape. It signed in November last year a five-year contract with Chile's SQM for the supply of 57,000 tons of lithium.

The battery maker has also made an equity investment in an Australian miner, Lake Resources, and clinched a 10-year supply deal for 230,000 tons of lithium.

BY PARK EUN-JEE, YONHAP [park.eunjee@joongang.co.kr]