Cathode materials to support LFP battery production at Georgia plant
SK On is strengthening its supply chain for the U.S. energy storage system market with a major lithium iron phosphate cathode material deal with POSCO Future M, as the Korean battery maker expands beyond its traditional electric vehicle business.
SK On said on Sept. 22 that it signed an agreement to purchase about 1.1 trillion won ($750 million) worth of LFP cathode materials from POSCO Future M over three years from 2027 through 2029.
The materials will be used to manufacture LFP battery cells for ESS applications at SK On’s plant in Georgia. The two companies also plan to discuss extending the supply arrangement beyond 2029.
The deal gives SK On a domestic source of one of the key materials needed for its emerging LFP business while reducing its exposure to Chinese suppliers in the U.S. market.
Building an LFP supply chain outside China
China has long dominated the LFP battery supply chain, particularly in cathode materials. But tighter U.S. restrictions on Chinese-linked battery supply chains have made sourcing outside China increasingly important for Korean battery manufacturers seeking to expand their U.S. operations.
The cathode materials supplied by POSCO Future M will use lithium secured through POSCO Group’s operations at salt lakes in Argentina.
POSCO Future M has also converted part of its high-nickel cathode material production capacity in Pohang, South Korea, to LFP production. Commercial production is scheduled to begin by the end of this year.
The arrangement creates a supply chain stretching from lithium resources in Argentina to cathode material production in South Korea and battery cell manufacturing in Georgia.
For SK On, that provides a clearer path to producing LFP batteries in the United States without relying heavily on Chinese cathode materials.
ESS opens another market for SK On
The agreement comes as SK On steps up its push into energy storage.
The company built much of its battery business around high-nickel cells for electric vehicles. ESS applications, however, have emerged as an increasingly important market as renewable energy installations and power-hungry data centers increase demand for large-scale energy storage.
LFP chemistry is well suited to this market because ESS customers place a premium on cost, cycle life and stable large-scale supply rather than the high energy density demanded by many premium EVs.
SK On has already begun building its customer base in North America. In August, the company secured an LFP battery cell supply agreement with U.S. energy storage company NeoVolta Power. It also signed an ESS supply agreement with U.S. renewable energy developer Flatiron Energy Development in September last year.
The POSCO Future M deal now adds a long-term material supply arrangement to those customer contracts.
Korean battery supply chain expands into LFP
The agreement is also significant for POSCO Future M.
Korean cathode manufacturers have traditionally concentrated on nickel-cobalt-manganese and other high-nickel chemistries, while Chinese companies built an early lead in LFP. Growing demand for lower-cost batteries has prompted Korean companies to add LFP to their portfolios.
POSCO Future M is seeking to compete through access to POSCO Group’s raw material network and new manufacturing processes aimed at improving production costs and product quality.
For SK On, securing that capacity ahead of planned U.S. production reduces one of the uncertainties surrounding its move into LFP.
“SK On is focusing on building a non-China supply chain and strengthening its competitiveness in key materials in response to changes in the global energy market and growing U.S. ESS demand,” said Kim Sung-tan, head of raw materials procurement at SK On.
The contract also reflects a broader shift underway in the Korean battery industry. As EV demand growth becomes less uniform across markets, battery makers are looking to ESS as another source of large-scale demand.
SK On’s Georgia operation will be an important part of that transition. Starting in 2027, the company plans to combine U.S. cell production with Korean-made LFP cathode materials, giving it a supply structure designed specifically for the expanding North American ESS market.
