[Edaily Reporter JAEMIN SONG ] SK On will procure 1.1 trillion won worth of lithium iron phosphate (LFP) cathode material from POSCO FUTURE M. This appears to be a preemptive move to secure a supply chain for non-Chinese core materials ahead of the production of LFP batteries for energy storage systems (ESS) at its plant in Georgia, U.S.

SK On announced on the 22nd that it has signed a supply contract with POSCO FUTURE M for LFP cathode materials.

The contract spans three years, from 2027 to 2029, with a total supply value of approximately 1.1 trillion won. Based on their medium- to long-term partnership, the two companies plan to discuss extending the contract beyond 2029.

The cathode material supplied by POSCO FUTURE M will be used in LFP battery cells for energy storage systems (ESS) produced at SK On’s plant in Georgia, U.S. This move aims to proactively secure key materials in response to growing demand for LFP batteries in the ESS market, where price and safety are more critical than in the electric vehicle battery market.

Although LFP batteries have lower energy density than nickel-cobalt-manganese (NCM) batteries, they are characterized by their relatively low cost, excellent thermal stability, and long service life. They are well-suited for ESS applications involving repeated charging and discharging, and their scope of use is expanding in line with the growth of renewable energy generation and the expansion of data centers.

The key focus of this agreement is to establish a supply chain that reduces reliance on materials sourced from China. POSCO FUTURE M plans to use lithium secured by the POSCO Group from salt lakes in Argentina as raw material and apply new manufacturing processes to enhance cost competitiveness and quality.

POSCO FUTURE M recently converted part of its high-nickel cathode material production line at the Pohang plant into an LFP cathode material line. Mass production is scheduled to begin at the end of this year, with supplies to SK On set to start in 2027. This effectively establishes a non-Chinese supply chain—spanning from raw material procurement to cathode material production and battery cell manufacturing—that connects South Korea and the United States.

From POSCO FUTURE M’s perspective, this contract allows the company to expand its cathode business—which had previously focused on high-nickel materials—to include LFP. SK On has enhanced its supply stability through collaboration with a domestic materials company while also establishing the supply base necessary to expand local production in the U.S.

SK On is also accelerating its efforts to secure ESS customers in North America. Last month, it signed a supply contract for LFP battery cells with U.S. ESS company Neovolta Power, and in September of last year, it signed an ESS supply contract with U.S. renewable energy firm Flatiron Energy Development. With this cathode material procurement agreement, SK On has further strengthened the material foundation needed to expand its North American ESS business.

Kim Seong-tan, Head of Raw Materials Procurement at SK On, stated, “In line with growing U.S. ESS demand, we are focusing on establishing a supply chain independent of China and strengthening our competitiveness in core materials.” He added, “Through strategic partnerships with leading companies, we will continue to pursue stable material procurement and market expansion.”