SK On signs U.S. graphite supply deal to counter IRA impact

SK On signed a supply deal for anode materials with a U.S. graphite supplier, upping its response to the U.S. Inflation Reduction Act (IRA) subsidy program aimed at barring battery materials sourced from China.

The local battery maker on Monday said that it signed a four-year conditional off-take agreement with Westwater Resources for natural graphite, meaning that SK On will purchase graphite produced by the Centennial, Colorado anode material company if a certain condition is met during the duration of the contract.

With the signing of the deal, Westwater Resources will supply natural graphite produced from its processing plant in Kellyton, Alabama from 2027 to 2031. The supply volume may reach up to 34,000 tons, subject to change based on the market’s demand during the period.

The latest follows a three-year agreement between SK On and Westwater signed in May last year. Under the deal, the two companies agreed to develop high-performance anode materials using Westwater's graphite.

SK On hopes that its expansion of the partnership with Westwater will further enhance the battery maker’s capabilities to meet the U.S. IRA rule’s requirements.

Under the tightened IRA, which began in 2024, an eligible clean vehicle may not contain any battery components “manufactured or assembled by” a foreign entity of concern (FEOC) to qualify for up to $7,500 in tax credits.

Starting in 2025, an eligible clean vehicle “may not contain any critical minerals that were extracted, processed or recycled by an FEOC."

Anodes are a core material in batteries along with cathodes, separators and electrolytes, which handle batteries' life span, energy density and charging speed. China currently controls about 85 percent of the world's anode material production.

Established in 1977, Nasdaq-listed Westwater Resources is an energy technology company focused on developing natural graphite-based anode materials. Westwater holds mineral rights to explore and potentially mine the Coosa graphite deposit, which spans 42,000 acres in Coosa County, Alabama.

Westwater is currently building a graphite processing plant in Kellyton, Alabama. The first phase of plant construction will produce 7,500 metric tons of refined graphite each year.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]